As growth extends to more regions, we see expanding opportunities across countries and assets.

Improving inflation and growth scenarios should enhance the equities and bond dynamic for multi-asset investors.

A robust growth backdrop, a key input for cross-asset positioning, benefited from pent-up demand and an accommodative fiscal policy stance.

With the second half of 2023 underway, how are the macro and market landscapes unfolding?

Over the past 18 months, high inflation drove rapid monetary policy tightening, which weighed heavily on consumer spending power and corporate margins. As inflationary pressures now abate, we see eventual improvement in both real incomes and profits, which should enhance prospects for multi-asset investors.

The Federal Reserve’s latest 0.25% interest-rate hike has likely capped one of its most aggressive policy-tightening cycles in 40 years. And the cumulative 5% policy rate increase in just over a year is now starting to have an effect on rate-sensitive sectors and inflation.

China's 20th National Congress could help air ideas for more growth-supportive policies.

Inflationary pressures from the COVID-19 crisis have been compounded by the surge in commodities prices sparked by the Russia-Ukraine war. In the US, the Consumer Price Index hit 9.1% year over year in June—its highest since 1982. In fact, most major economies are dealing with inflation highs not seen in decades.

Capital markets have rebounded from their COVID-19-induced lows, but impacted industries have lagged substantially. That pessimism may be overdone in some cases, creating opportunities for multi-asset investors to exploit dislocations.

In addition to its tragic human toll, COVID-19 triggered the sharpest recession in recent history, and efforts to control its spread have transformed the way we work, the way we shop and how we connect with others. We think these changes will last awhile—with implications for asset allocation.

The recent decline in US corporate cash hasn’t raised a lot of eyebrows, but it has caused one of our equity-quality indicators to flash a warning. Since equity quality is one of the signals with a strong track record of predicting market sell-offs, should investors be worried?

Investors are likely to remember 2018 as the end of the era of easy money, low volatility and steady margin expansion. Investing will be more challenging in 2019—and diversification will be more important than ever.