MPG: Equity markets heading for choppy ride

January 10, 2024

In the current yield driven market equities are expected to have a choppy ride with some downward pressure to accommodate the current higher yield market.

Equity markets are heading for a choppy ride in the year ahead as the higher yield market takes hold, Managing Partners Group (MPG) says today . It is predicting rate cuts of 1.5% and 2% over the year ahead in the US in the first quarter. ‘The yield driven market worldwide will temper performance expectations for fixed income funds and those aiming for double digit performance will need to increase exposure to corporate bonds, and other higher yielding securities. Alternative asset classes are also set to benefit from increased diversification as investors look for reasonable returns.’

‘We are now very much in a yield driven market and we expect equities to have a choppy ride with some downward pressure to accommodate the higher yield market we are now in, which demands higher dividend rates per share.

If our forecasts are correct, it will give the UK property market a huge boost as it will be much easier to predict interest rates for the next five years enabling more competitive fixed rate mortgage deals to be on offer.’

MPG is forecasting GDP growth of closer to 1.5% for the US, France and Germany but warns there is a bigger recessionary risk in the US during the first half of 2024 that the Fed will aim to avert by dropping interest rates. It expects inflation to drop to around 2.25% in the EU by the end of the year.