While Canada’s economy accelerated at the start of 2024, economists expect it to slow for the remainder of the year as retail sales slow, manufacturing softens and home sales dwindle.
U.S. stock performance was driven by better than-expected earnings growth, continued excitement over artificial intelligence (AI) and a positive outlook for inflation.
European equities have started 2024 as one of the stronger regions in the context of broadly robust global markets.
Asian equities gained over the three-month period, slightly outperforming most other major markets in local currency but underperforming in U.S.-dollar terms.
Emerging-market equities have started to outperform developed markets in a reversal from the trend of the past few years, catalyzed by an early 2024 rebound in Chinese equities.
Executive summary
A variety of factors have motivated us to upgrade the likelihood of a soft landing for the U.S. economy to 60% from 40% last quarter. We now look for modest growth in the first half of 2024 instead of recession.
Economy
We upgraded the likelihood of a soft landing for the U.S. economy to 60% from 40% last quarter, and now look for modest growth in the first half of 2024 instead of recession.
Fixed Income
Our models indicate that the appropriate level for bond yields is lower if inflation continues to fall as we expect. A variety of bullish technical measures also suggest a solid outlook for bonds.
Equity markets
Global equities have enjoyed a powerful rally in the past quarter, with many major markets reaching record highs. Most of the recent gains, however, have been delivered by a narrow set of mega-cap technology stocks.