Hi, I’m Gargi Chaudhuri, Chief Investment and Portfolio Strategist for the Americas for BlackRock. The team and I just published our Spring 2024 Investment directions and I'm so excited to discuss it with you. So let's begin.
The U.S. economy has evolved since our last report earlier this year. Inflation remains stubbornly above the Fed’s target of 2% and although economic growth is slowing, it remains firmly solid, thanks in part to a robust consumer.
We hold our view that the Fed will deliver three policy rate cuts before the end of the year. However, somewhat different from before, is that the risk of only two cuts appears higher to us than the risk of four or more. The Fed will need to navigate cautiously and they need to find greater confidence on the trajectory of inflation - before it begins its cutting cycle.
Consistent with higher short-term rates, as of March, money market fund assets have surged to above $6 trillion, which is at an all-time high, but we believe cash returns are set to decline once the Fed begins its rate cutting cycle. Investors should consider stepping away from the sidelines to seek upside potential find opportunities in fixed income. Income-oriented investors could take advantage of these opportunities by allocating to the 3–7-year segment of the yield curve as well as short-term investment grade credit.
Within equities, investors could consider broad-based exposures and taking selective risks in high-quality assets. We like specific sectors, such as financials and communications, and these stand out as investors look to add granularity to diversified portfolios.
Finally, looking abroad, investors could find selective opportunities in emerging markets through single-country exposures such as Japan and India, and by differentiating between regions whose central banks have begun easing policy versus those that have not. We also encourage investors to focus on structural shifts such as the themes of reshoring and infrastructure.
To read more into our views and our product recommendations, visit iShares.com to read our full Investment Directions. Thank you and speak to you soon!