November 22, 2023

Institutional Views

November 22, 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:


USD to stay stable in H1.24 due to robust US economic growth and high relative US interest rates. Expect two to three 25bp cuts by the Fed next year, and data dependent, to start in summer. Forecast three cuts for BOE andECB, starting May and June respectively. Quality stocks with strong balance sheets and high returns, including many in the technology sector, are best positioned to generate earnings despite weaker growth. Quality bonds offer favourable yields and potential capital gains, specifically 5-year duration which offers appealing combination of higher yields, greater stability, and some sensitivity to falling interest rate expectations. Oil prices to trade in USD90–100/bb range over coming months.

Citi Bank

Do not expect a synchronised economic collapse or a subsequent “V-shaped” rebound. The economy is experiencing a series of “rolling recessions,” but will “roll out” in 2024. Evolving macro environment suggests that equity price appreciation will broaden in the US, then globally. Overweight to the S&P400 and 600 Growth components, first time overweight to equity asset allocation since June 2020. Expect substantial gains on back of high confidence in core inflation measures slowing in 2024, moderating yields, and corporate profits to rise. Fundamentals suggest the US dollar may be even stronger than thought, thus remain overweight Asian emerging markets excluding China. Japan could be an opportunistic add in the near term.


BOJ to abandon NIRP in Q3.24 earliest and YCC in Q2.24 with economy likely to remain on above potential recovery path albeit with same volatility in and beyond Q4.23. Chinese economy has not yet truly stabilized and still faces a risk of another dip, due to the large scale of pre-sold but unfinished homes in low-tier cities. Expect an extended pause across all central Asian banks and rate cuts to broadly begin from Q2.24 onwards. Forecast US recession in H2.24. Inflation is slowing but will remain well-above Fed target. Hiking cycle over, expect rate cuts and QT halt from Sep.24. Forecast moderate Euro area three quarter recession (-0.5pp of GDP), from Q3.23. Rate cuts to start from Q3.24. UK GDP likely to contract by 0.3pp over two quarters from Q4.23. Rate cuts from Q3.24.


Upgraded US recession probability over next 12m from 65% to 70%. Fed, BoC, the ECB and the BoE hiking cycle terminated.


Risk adjusted value shifted in favour of high quality bonds (DM government bonds and investment grade corporates). Fed rate plateau, favour quality stocks with strong balance sheets and earnings power. Add large cap bias as larger and more established companies more resilient to any tightening of loan availability than small and mid-cap stocks. Do not expect USD to be materially affected by projected Fed rate cuts in 2024. Higher rates are yet to fully fed into economic data, however tight labour market and resilient demand, in particular for services, seem to be holding off recessions. Upgrade South Korean equities to mild overweight as Q3 results and company guidance reflected a more upbeat outlook for global tech.

Morgan Stanley

Maintain soft U.S. landing outlook, with forecast that U.S. GDP growth slows from an estimated 2.5% this year on a Q4 over Q4 basis to 1.6% in 2024 and 1.4% in 2025. Expect 25bp cut in June 2024, 25bp cut in September, and in Q4 2024 will likely begin cutting 25bp every meeting, eventually bringing the real rate to .4% by the fourth quarter of 2025, when core inflation, GDP growth and unemployment are near neutral.

* 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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