December 20, 2023

Institutional Views

December 20, 2023

Individual investors are often bombarded with specific stock calls and targets.

However, we believe you can get a better medium to long term perspective by considering asset class, sector, thematic and macro economic views.

To help you, every week, we pour through the research produced by some of the larger institutions, and summarize their market thoughts.

Below are this week’s 6 updates:


Stock-bond negative correlation likely to return as inflation falls closer to central bank targets - continue to recommend seeking quality in both. Forecast the 10-year US treasury yield to end 2024 at 3.5%. We remain most preferred on high-quality bonds—specifically high grade (government) and investment grade, particularly in the five-year segment. Within equities, we continue to recommend a bias toward quality—companies with strong returns on invested capital, resilient operating margins, and relatively low debt on their balance sheets. Recently upgraded US small-cap stocks to most preferred. Investors can consider allocations to alternatives, specifically macro hedge funds, which are particularly adroit at capitalizing on changing macroeconomic environments.

Citi Bank

Forecast falling inflation and a turn in Fed policy improving market environment and faster growth in late 2024. “Standard US recession” unlikely, although US and world economy to slow in 2024 before strengthening substantially in 2025. Markets price in a faster decline in rates than the Fed’s most recent projections. Six-to-seven 25bp easing steps priced in by market appears aggressive. Current yields still on the higher side of fair value given benign inflation outlook. Forecast widening of EPS gains driving a “broadening” for equity performance in 2024, specifically, added tactical over-weights to S&P500 Equal Weight Index S&P400 and 600 Growth indices. Cash allocation recommended at 1%.


Expect pre-emptive US rate cut in June 2024 with cuts every meeting starting in September 2024. Forecast another Chinese dip towards end-2023 and spring 2024. Base case assumes Asian export downturn is bottoming out, and will improve in Q4, reflecting an improved tech cycle. Resilient India growth and higher food inflation support extended policy pause, with 100bp of rate cuts from August 2024. Despite a worsening domestic economy, an improving chip cycle should delay BOK rate cuts to July 2024 (100bp of cuts in 2024).


Recession remains base case and inflation will undershoot expectations. This will lead to faster and deeper rate cuts, even more substantial than what the market prices in.


Expect stickiness in inflation to keep central banks on hold for longer than currently priced by market. Remain bullish USD, despite ECB and BoE pushing back on rate cuts, in stark contrast to the Fed’s dovish signals. The BoE’s current bias is more hawkish than many other central banks but remain sceptical at how long this can last. Maintain appeal for India and ASEAN, which have promising growth opportunities supported by strong FDI inflows, consumer spending and young demographics. Project consumer services to deliver double-digit earnings led by select Chinese internet leaders and consumer discretionary names.

Morgan Stanley

US economic outlook is slowing but not falling off a cliff - soft landing call remains. Expect Fed to cut rates in June and deliver four rate cuts through 2024, and an additional 200bp through 2025. Project Euroarea inflation ending at the ECBs target, or reaching target at Q4 2024. ECB rate cuts from June. Forecast China to continue to roll out stronger and more coordinated fiscal, monetary and housing easing policies. Expect modest Chinese growth recovery next year at 4.2%, up from 4% in 2023. Predict 9% earnings growth for MSCI China in 2024 compared to consensus at 16%.

* Please note these are not the thoughts or analysis of illio but the respective institutions. We have summarized what we believe are key points. We assumes no responsibility or liability for any errors or omissions in the content of this site. The information contained herein is not intended to be a source of advice and the information contained in this website does not constitute investment advice.


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