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The window for a recession is closing
Published on 23.02.2024 CET
Macroeconomic update for March 2024
We long expected 2024 to be marked by lower inflation, lower interest rates, and a recession. While the latter remains a valid scenario, the unemployment rate has not yet risen noticeably, and an increasing number of global leading indicators point to an improving situation. Declining inflation and the expectation of lower rates may have contributed. This means that the window for a recession seems to be slowly closing.
We have tactically increased equities to overweight from neutral amid signs of PMIs bottoming out and declining inflation that could lead central banks to cut rates more than what is currently expected by financial markets.
Key Takeaways
- Recession or no recession?
The US labor market has proven robust and has propped up the economy. Without it weakening in coming months, the window for a recession is closing. - Slowing inflation and rate cuts
We expect inflation to continue to ease. We would argue that this could lead central banks to make more significant rate cuts than the market is currently pricing in. - Going overweight equities
We ugprade our position in stocks at the expense of our exposure to commodities.
About the author
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Dan Scott
Dan Scott has been the head of Vontobel Wealth Management’s Investment Office and Deputy Chief Investment Officer since the end of 2017. Dan joined Vontobel from Credit Suisse where he held various positions as a financial analyst including deputy head of equity research as well as thematic research analyst. As an on-air presenter for CNBC and as a regular contributor to the Wall Street Journal, Dan also has extensive experience in business journalism.