Better things lie ahead for bonds, but the prospects for stocks, especially U.S. equities, are less rosy.
Those were the recurring themes among the capital markets assumptions provided by major investment firms as 2023 wound down.
In contrast with the major firms’ capital markets assumptions released toward the end of 2022, when declining equity prices and higher interest rates buoyed the prospects for both stocks and bonds, the 2023 equity market rally diminished most firms’ return assumptions for U.S. stocks. Meanwhile, last year’s continued interest-rate hikes have contributed to higher forward-looking return prospects for bonds and cash. And firms’ outlooks for non-U.S. stocks, a persistent bright spot in my annual compendium, continued to be more robust than their expectations for companies domiciled stateside, thanks largely to foreign stocks’ valuation advantage.
How to Use the Forecasts
Although it’s reasonable to…
