Picture this: Economic forecast in six charts

2024 Outlook Picture This

Outlook | Macro and market | Interest rates

Macroeconomic regime change

For illustrative purposes only. Chart data: January 1964 – August 2022. The chart reflects the evolution of the global cycle through the lens of growth and inflation. Each dot on the chart represents a quarter. Inflation is plotted on the x-axis and growth on the y-axis, which determines the position of each dot. Lines connect consecutive quarters. Sources: Bloomberg, Refinitiv, Wellington Management. | Views are as of the date indicated, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may make different investment decisions for different clients. This material is not intended to constitute investment advice or an offer to sell, or the solicitation of an offer to purchase shares or other securities. As of December 2022.

In a departure from the past three decades, we expect that future economic cycles will feature shorter, more frequent, and less globally synchronized swings, accompanied by more volatile and, on average, higher inflation.

Learn about implications of the new macro regime.

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Outlook | Commodities | Market commentary

Commodities: Top ideas

For illustrative purposes only. | kt = thousand tons. | Sources: Goldman Sachs, WoodMac, Bloomberg Index Services Limited, and Wellington Management. Data as of 31 December 2022.

We believe future commodities corrections may be related to a weakening macro environment and should be viewed as buying opportunities. When macro concerns recede, prices have the potential to snap back to demand-destruction levels, given the absence of the typical cushion from inventories and spare capacity.

View evolving opportunities within commodities.

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Outlook | Venture capital | Private equity

Venture capital: Overcoming challenges

^{For illustrative purposes only.}

Financial markets have recently experienced geopolitical tensions, inflation, a regional banking crisis, and, most critically, higher interest rates. Venture capital adapted with a general slowdown, as valuations, deployment, fundraising, and exits returned to more moderate levels. We see positive signals indicating that the downturn may have hit bottom.

Read our venture capital outlook.

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Outlook | Sustainability | Volatility

Biodiversity and supply chain transparency

For illustrative purposes only.

Risks to biodiversity are a potential supply chain concern, given the importance of healthy ecosystems and raw materials like water, minerals, and forestry inputs to a range of industries. The need for greater transparency around the depletion of natural capital, the energy transition, and other key supply chain risks is growing.

Read our sustainable investment outlook.

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Outlook | Income | Economic cycle

Opportunities to add credit risk

For illustrative purposes only. Sources: Bloomberg, BofA Merrill Lynch, Morningstar/LSTA, JPMorgan, Wellington Management | Excess-return forecasts are versus duration-equivalent US Treasuries. These are simulated forward-looking excess-return and volatility expectations based on analyses of historical return and volatility characteristics. The resulting forecasts are considered, along with other fundamental and technical data points, to determine which fixed income sectors appear attractive at the time. Wellington Management determined the outlook above based on its own views and not necessarily based on objective market data. There can be no assurance that such information has been correctly determined, and nothing herein is intended to be a projection or assurance of performance of any portfolio, market, or asset class. The scenarios shown are hypothetical, for illustrative purposes only, and not representative of an actual investment. PAST PERFORMANCE DOES NOT PREDICT FUTURE RETURNS. | Chart data: As of 31 October 2023.

We see several opportunities in higher-yielding credit sectors. While these excess return forecasts assume that spreads will revert to their historical medians, our slightly more bearish forecast incorporates some degree of spread widening.

Discover credit opportunities on the horizon.

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Outlook | Fundamental equity | EM equity

Will market concentration unsettle “Goldilocks?”

For illustrative purposes only. Measured using the standard Herfindahl-Hirschman Index metric. Sources: Bloomberg, Wellington Management. Data as of 31 July 2023.

The S&P 500 Index is the most concentrated it has been since the 1970s. While equal-weighted US equity valuations aren’t overly stretched, mega-cap technology stocks do appear fairly valued. Given tech’s dominance within US indices, this is a risk in the event of a rates-driven, risk-off shift in market sentiment.

Read our views on equity market overweights and underweights.