Multi-Asset Income Investing in a 2024 Slowdown

For multi-asset income investors, adapting portfolios for equity defense, credit potential and duration exposure should be on the docket for 2024.

Coming into 2023, many economists and market observers set their base cases to a global recession in the second half of the year. In their view, rapidly tightening monetary policy across nearly all central banks would translate into tighter financial conditions and slower growth in the real economy.

Reality unfolded quite differently.

Economic activity was resilient enough to surprise even the most bullish investors. A historically tight labor market bolstered a strong US consumer, while a warmer-than-expected European winter reduced the risk of an energy crisis—though headwinds from a China slowdown remained. This backdrop forced rates up across the board, and the market pushed back its expectations for rate cuts deep into 2024, acknowledging the “higher for longer” narrative (Display).

Rate-Cut Expectations Changed Significantly During the Year