Market and economic update | Insight Investment

While investors are enjoying yields on credit at levels last seen in 2008, they face a volatile outlook for the rest of 2024. Inflation may take longer to tame than some expect, which could restrict the ability of central banks to cut rates. In addition, there is heightened geopolitical risk and a large electoral cycle that could spark an extra layer of political uncertainty.

Key takeaways:

• We expect fewer interest rate cuts than the market is pricing in, in 2024. We expect the first cuts to take place in June for the US and Europe and in August for the UK.
  
  
• Investment grade credit is looking increasingly attractive in yield terms. There is now plenty of opportunity to create diversified portfolios that can deliver high certainty of cashflows.
  
  
• A big electoral cycle across the globe and elevated levels of geopolitical risk means that volatility in bond yields is likely to remain high in 2024.