The S&P500 has continued to rise, with growth outperforming value. But this was driven by a handful of stocks. We expect higher-for-longer rates to lead to a slowdown in global growth, with value and dividend-paying stocks starting to outperform. Under this backdrop, investors should consider equities for income rather than bonds.
US growth remains resilient, and most analysts expect interest rates to be higher for longer. Economists are talking about a soft landing for the US economy. The macro data remains strong despite high energy prices, elevated interest rates, and geopolitical instability.
Inflation is starting to recede, suggesting rates are at or near their peak. None of this is happening quickly, and with rates forecast to be higher for longer, we see a possible US recession on the horizon, albeit potentially shallow.
