Ongoing expectations of artificial intelligence’s (AI’s) transformative impact on the global economy could bolster investor sentiment during the next 6 to 12 months, according to Loomis, Sayles & Company’s Global Macro Strategist, Credit, Craig Burelle. What sectors may benefit, along with other macroeconomic drivers are analyzed.
Highlights
- Macro Drivers: US core Personal Consumption Expenditure (PCE) inflation is expected to average just under 2.5% for the first time this cycle during the third and fourth quarters. After that, it should drift slowly toward 2.0% driven by less shelter and housing inflation.
- Corporate Credit: Credit market yields are near multi-year highs and could indicate good value. Election-driven volatility could present opportunities to add credit exposure at wider spreads.
- Global Equities: Positive trends across equity markets are likely to continue so long as earnings expectations remain robust. The US, Japan and emerging markets may have the potential to produce double-digit year-over-year earnings growth for 2024.
- Currencies: US dollar strength is likely to subside once the Fed begins to ease policy. Foreign exchange exposure to Latin America, particularly Brazil, Colombia, and Chile appear favorable.
Resource
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