2024

Global Market
Outlook
Tectonic shifts create
new opportunities

Arif Husain, CFA® Sébastien Page, CFA® Justin Thomson

Head of International Head of Global Multi‑Asset Head of International Equity
Fixed Income and Chief and Chief Investment Officer and Chief Investment Officer
Investment Officer

2024 Global Market Outlook

 Navigating macroeconomic fog | page 3
Key global economies—the U.S. economy in particular—have demonstrated surprising resilience to
higher interest rates. But headwinds are likely to mount in 2024.

Rethinking fixed income | page 6

We think the Fed will be slower to cut rates in 2024 than markets seem to expect. High yield and
shorter‑term investment‑grade corporate bonds could offer opportunities.

Broadening equity horizons | page 9

Equity investors will need to cast wider nets in 2024. We see opportunities in Japan, emerging markets,
health care, and artificial intelligence.

Tactical allocation views | page 13

Our views are informed by a subjective assessment of the relative attractiveness of asset classes and
subclasses over a 6‑ to 18‑month horizon.

2024 Global Market Outlook 1

 Introduction: A world transformed

The economic distortions of the past few other major global economies. Fiscal Looking beyond the tech giants
years have produced tectonic shifts in the stimulus has added further support.
global investment landscape. The massive The global equity rebound in 2023 was
fiscal stimulus and near‑zero interest rates dominated by a handful of mega‑cap
seen during the pandemic have given way Bond volatility moves to the U.S. technology stocks. But positive
to tighter monetary policies and sharply long end fundamentals in some regional markets
higher bond yields. and innovations in other key sectors should
Uncertainty is likely to keep fixed income help expand the opportunity set in 2024.
While the U.S. Federal Reserve and other volatility high in 2024. But if major central
major central banks have made progress banks remain on hold, volatility is likely to Health care innovation is one area that
against inflation and policy rates appear move to the long end of the yield curve, could offer opportunities, as could the
close to their peaks (Figure 1), our as opposed to the sharp moves seen at energy sector, thanks to capital investment
analysis is that the Fed is likely to hold the short end as central banks tightened. in both traditional and renewable energy
rates steady in 2024. Surging U.S. Treasury issuance also could sources. Commodity‑related sectors
keep upward pressure on longer‑term yields. appear to have bottomed and could be
Monetary policy effects typically are felt attractive hedges if inflation proves stickier
with a lag, so global economic growth Attractive yields should support below than expected.
remains at risk. The eurozone already is investment‑grade (IG) corporates, with
in recession, and China’s post‑pandemic improved credit quality helping keep Emerging market (EM) equities are
recovery has been disappointing. defaults relatively low. Shorter‑term attractively valued relative to developed
However, the U.S. economic outlook IG corporates also appear to offer markets. We see selective opportunities in
is more encouraging, as corporations opportunities. Careful attention to issuer China, despite sluggish economic growth.
and consumers both have proven less fundamentals will be critical. Within the developed markets, structural
sensitive to higher rates compared with and cyclical factors should be supportive
for Japanese equities.

Short‑term interest rates appear close to cyclical peaks

(Fig. 1) Central bank policy rates.*

10 U.S. Eurozone UK Japan Australia

Central Bank Policy Rate (Percent)

-2
1993 1998 2003 2008 2013 2018 2023

As of November 30, 2023.

*U.S. = federal funds rate upper limit; eurozone = European Central Bank main refinancing rate; UK = Bank of England official bank rate; Japan = Bank of
Japan overnight call rate; Australia = official cash rate, end of period.
Sources: Haver Analytics/Federal Reserve Board, European Central Bank, Bank of England, Bank of Japan, Reserve Bank of Australia. T. Rowe Price
calculations using data from FactSet Research Systems Inc. All rights reserved.

2024 Global Market Outlook 2

 Navigating macroeconomic fog

The COVID pandemic and the subsequent Geopolitical uncertainty also could
recovery continue to distort the economic bring further volatility, particularly if
data, forcing economists who rely on conflicts in the Middle East and Ukraine
traditional recession signals to continually cause a resurgence in energy prices.
revise their assumptions. As a result, Recent election victories for far‑right
the most anticipated global recession populist candidates in Argentina and
in history has become the most delayed the Netherlands raise the question of
recession in history. whether further wins for populist parties
could occur elsewhere, especially in the
To be sure, there are reasons for caution U.S., where the November 2024 election ...the most
regarding the global economic outlook. will be the most consequential currently
Europe looks likely to endure stagnant known political event of the year. anticipated
growth in early 2024 before recovering
in the second half. In Asia, China’s As of late November 2023, most global global recession in
economic outlook remains gloomy, with economies were showing surprising
few signs of improvement in the country’s resilience to higher rates (Figure 2), and history has become
property market. Commercial real estate the U.S. economy was performing better
sectors remain fragile in several other than expected. The unprecedented the most delayed
countries as well. levels of cash generated by pandemic
support and other fiscal stimulus recession in history.
Meanwhile, the U.S., Japan, and Europe measures have been a key support for
are at different stages in the balance U.S. household and corporate balance
between growth and inflation, meaning sheets. Excess consumer savings
the Fed, the European Central Bank, should continue to provide support for
and the Bank of Japan (BoJ) are likely U.S. economic growth going forward
to pursue increasingly asynchronous (Figure 3).
monetary policies in 2024, adding to the
potential for increased market volatility.

Major global economies have shown surprising resilience

(Fig. 2) Real growth in Gross Domestic Product (GDP) at 2010 prices.
20 U.S. China Europe Japan

15

10
Percent

-5

-10

-15
18

19

19

20

20

21

21

22

22

23

23
20

20

20

20

20

20

20

20

20

20

20
3

3
Q

As of September 30, 2023.

Sources: U.S. Bureau of Economic Analysis, Statistical Office of the European Communities,
Cabinet Office of Japan/Haver Analytics. T. Rowe Price calculations using data from FactSet
Research Systems Inc. All rights reserved.

2024 Global Market Outlook 3

 U.S. consumers are still flush with cash
(Fig. 3) Checkable deposits and currency holdings of U.S. households.
5,000

4,000
USD Billions

3,000

2,000

1,000

0
1983 1988 1993 1998 2003 2008 2013 2018 2023
As of June 30, 2023.
Source: U.S. Federal Reserve Board.

Consumer spending has been the most While the post‑pandemic regime may
resilient driver of growth, due to the not align perfectly with any of these prior
strength of the U.S. labor market. At the end periods, it will include some factors that
of September 2023, there were 9.6 million prevailed during those regimes. Given the
open jobs available for the 6.4 million shift away from the structural forces that
unemployed workers in the U.S. labor force. supported disinflation and lower rates
in the wake of the 2008 global financial
crisis (GFC), a return to the post‑GFC
Dealing with regime change “new normal” strikes us as the least likely
outcome going forward.
Even if the U.S. economy remains resilient
in 2024, we believe investors will need Heading into 2024, inflation risks are
to adapt themselves to a new market skewed to the upside. Energy prices are
regime. To understand the implications a concern amid supply‑side pressures.
of this shift, it is useful to examine the As of third quarter 2023, U.S. wages
four historical regimes that U.S. markets were still growing at almost a 4%
have experienced since 1955, after the annual rate. If U.S. consumer inflation
distortions created by World War II and the changes course and reaccelerates while
Korean War had largely dissipated.

Historical market regimes and their defining characteristics

Booming economy Stagflation Old normal New normal
1950s/1960s 1970s 1982 onward Post 2008 GFC

— High GDP — Low/unstable — Secular decline in — Slow economic growth

— Low unemployment economic growth interest rates — Low interest rates
— Low inflation — Low stock returns — Low inflation
— Spiking inflation

For illustrative purposes only.

2024 Global Market Outlook 4

economic growth remains anemic, the and a market sell‑off, it could be an
risk of stagflation will rise considerably. opportunity to buy stocks. ...we see no
Which regime is most likely to prevail in However, we also don’t think this is the reason for
2024? Recent readings for the fed funds right time to take large tactical (short-term)
rate and inflation have been closest to allocation bets. The recent “dis‑inversion” investors to be
the pre‑GFC “old normal.” But the regime of the U.S. yield curve could augur volatility
second closest to recent conditions isn’t in both stocks and bonds in the months excessively bearish.
stagflation, it’s the postwar boom. ahead. We think the best approach heading
into 2024 is to have a broadly neutral view
It remains to be seen how real on risk assets, including equities.
(after‑inflation) interest rates above 2%
will play out in the markets. But we do With U.S. interest rates closer to their
not believe that high rates will kill the historical averages, a balanced portfolio
U.S. economy. Rates are high relative to could offer diversification benefits1 as
the post‑GFC period, but not relative to bonds now provide higher income and
capital market history. The federal funds ballast to stocks. However, interest rates
rate exceeded 5% for decades and stock are likely to remain volatile in 2024, which
markets still did well. Sticky inflation could favor cash or short‑term bonds.
historically has been good for earnings. These assets currently offer attractive
yields with minimal duration2 exposure
and could be potential sources of liquidity
Neutral on risk assets if market opportunities arise.

Despite the macroeconomic uncertainties, Looking beyond the traditional 60/40 stock/
we see no reason for investors to be bond portfolio, investors willing to take on
excessively bearish. Market segments more risk could consider alternatives with
that don’t trade at nosebleed valuations, lower correlations to traditional assets and
such as small‑ and mid‑cap stocks and areas of the market that could benefit from
real assets equities, look appealing on a market dislocations and higher yields,
relative basis. If we see a spike in volatility such as private credit.

1
Diversification cannot assure a profit or protect against loss in a declining market.
2
Duration measures a bond price’s sensitivity to changes in interest rates. The longer a bond’s
duration, the higher its sensitivity to changes in interest rates and vice versa.

Navigating macroeconomic fog

Investment Idea Rationale Examples

Focus on areas with The global economy has been resilient despite higher rates, but — Short‑term fixed income
attractive income. strong growth is unlikely in 2024. This should limit the upside
in asset prices, so income from higher yields is likely to be an
important driver of returns in 2024.

Consider tilting toward asset Small‑cap equities trade at historically low valuations, reflecting — U.S. small‑cap stocks
classes where valuations economic growth concerns and the potential impact of higher — International small‑cap
are undemanding. rates. Small‑caps could provide significant upside if the economy stocks
remains resilient.

For illustrative purposes only. This is not intended to be investment advice or a recommendation to take any particular investment action.

2024 Global Market Outlook 5

Rethinking fixed income

The massive tightening of financial Higher for longer

conditions since late 2021 has produced
a fixed income market vastly different As of late November, futures markets
from the stimulus‑fueled environment were pricing in four Fed rate cuts in 2024,
during and following the pandemic. The anticipating that the U.S. central bank
cross‑currents generated by these changes will ride to the rescue if the U.S. economy
will challenge investors again in 2024. falls into recession. However, we believe
the failure of the Fed and most other
Heading into the year, we think the best developed market central banks to get
way to describe the macro environment ahead of inflation following the pandemic
is that we have reached or passed peak makes them more likely to keep policy
everything—inflation, liquidity, fiscal rates at relatively high levels through
support, China growth, housing, credit much of 2024.
availability, and labor market strength.
In other words, most of the one‑off Structural forces such as deglobalization,
tailwinds that defined the post‑pandemic lower labor force participation rates, and
environment are fading away. energy price pressures also could make
inflation stickier than in past economic
Although global economies—the U.S. slowdowns, further discouraging central
economy in particular—have held up banks from easing monetary policy.
relatively well so far despite higher rates,
a hard economic landing is not out of the Of course, a major episode of financial
question, especially following the spike in volatility could prompt monetary
bond yields. Even if a recession is avoided policymakers to look beyond stubborn
in 2024, we are likely to see economic inflation and cut rates or pause
growth concerns intermittently elevated. quantitative tightening—the contraction in
central bank liquidity as bonds purchased

U.S. Treasury debt issuance is shifting to longer maturities

(Fig. 4) Net new Treasury issuance.

3,000 Bills Notes and Bonds

2,500
2,000
1,500
USD Billions

1,000
500
0
-500
-1,000
-1,500
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E 2024E 2025E
As of November 18, 2023. 2023 through 2025 are estimates.
Sources: U.S. Treasury, Securities Industry and Financial Markets Association, Morgan Stanley. Estimates by Morgan Stanley.
Actual outcomes may differ materially from estimates.

2024 Global Market Outlook 6

 in pandemic stimulus efforts are allowed likely to be a more significant factor than the
to run off their balance sheets. outlook for interest rate levels.

Potential “canaries in the coal mine” Another implication of the surge in

warning of such a correction might government bond issuance is that it could
include a more severe banking crisis, crowd corporate borrowers out of the Obtaining attractive
a collapse in commercial real estate, a market—or at least force up their funding
significant sell‑off of the mega‑cap tech costs. This could make companies less yields doesn’t require
stocks that led U.S. equity markets higher likely to spend on capital projects or hire
in 2023, or deteriorating conditions in more employees, reducing support for the investors to accept as
private equity markets. global economy.
much credit risk as in
However, our base‑case outlook is that
central banks will remain on hold for an High yield credit quality the past....
extended period into 2024. This stance has improved
is likely to shift volatility to the longer
end of the yield curve, as opposed Looking more closely at the corporate
to the exaggerated upward moves in bond market, attractive yields should
shorter‑term rates seen as the Fed continue to support demand for high yield
tightened in 2022 and early 2023. bonds, even though credit spreads—the
yield differences between bonds with
credit risk and high‑quality government
Sovereign issuance is surging bonds with similar maturity dates—
appear less compelling, trending near
With fiscal deficits ballooning, we expect historical averages as of late November.
governments to continue flooding the
market with new sovereign debt. This is Obtaining attractive yields doesn’t require
particularly true in the U.S., where the investors to accept as much credit risk as
Treasury is shifting the bulk of new issuance in the past because the quality of the high
away from short‑term bills and into yield bond universe overall has improved
longer‑term notes and bonds (Figure 4). (Figure 5).

This issuance shift is the basis for one of our We also see attractive opportunities in
highest‑conviction calls: that yield curves shorter‑term IG corporates. While these
will steepen in 2024. Although yields on instruments carry some credit risk, short
high‑quality sovereign debt may have peaked maturities reduce their exposure to an
in late 2023, they still could move higher. economic downturn. As of late November,
Accordingly, we think curve steepening is shorter‑term corporates provided a
meaningful yield premium over money

High yield ratings quality has “migrated up”

(Fig. 5) Percent of Credit Suisse High Yield Index that is BB rated.*
70 61%
60
BB Rated (Percent)

50
40
30 37%
20
10
0
2007 2009 2011 2013 2015 2017 2019 2021 2023
As of October 31, 2023.
Source: Credit Suisse (see Additional Disclosures).
*Based on S&P ratings. BB represents the highest rating below investment grade.

2024 Global Market Outlook 7

market funds and bank savings deposits,3 should reward investors in the event of
leaving investors better positioned if major downturns in equities and credit.
short‑term rates decline in 2024.
Non‑core fixed income assets, such
Going into 2024, credit spreads on as high yield or EM bonds, also should
longer‑term IG corporates aren’t wide provide diversified sources of return
enough to compensate for the additional risk even if equities perform well or move in a
stemming from their extended maturities, in sideways trend.
our view. However, spread widening could
create more attractive opportunities in these In 2023, many investors seemed inclined
bonds as the year progresses. to wait for a clear peak in yields before
meaningfully raising their fixed income
We expect correlations between returns allocations. In 2024, we think a more
on high‑quality sovereign debt and the attractive option will be to take advantage
performance of risk assets such as of some of the highest yields available
equities and corporate bonds to remain over the past two decades in many fixed
volatile as markets adjust to the new income sectors. As always, in‑depth
environment of higher interest rates and analysis of credit fundamentals—for both
as global economic growth decelerates. IG and high yield issuers—will be essential.
However, we believe duration exposure

3
Bank savings accounts are insured (up to USD 250,000) by the Federal Deposit Insurance
Corporation (FDIC). Shorter-term corporates and money market funds are not FDIC-insured. Money
market funds typically seek to maintain a share price of $1.00, but there is no guarantee they will
do so. Fixed-income securities are subject to varying levels of credit risk, liquidity risk, call risk, and
interest-rate risk.

Rethinking fixed income

Investment Idea Rationale Examples

Interest rates have likely peaked, Easing inflation and diverging central bank policies should keep rate — Dynamic/flexible bond
but volatility could persist as yield volatility elevated. Curve steepening is expected. This environment strategies
curves steepen. should favor short- to intermediate-term bonds and strategies with
the flexibility to navigate volatility as interest rates reset.

Take advantage of higher yields Recession remains a risk, but we expect only a modest uptick — High yield bonds
and supportive fundamentals. in defaults. High yield offers a compelling risk/reward profile, — Private credit
as credit quality has improved. Higher yields and reduced bank
lending should be positives for private credit.

For illustrative purposes only. This is not intended to be investment advice or a recommendation to take any particular investment action.

2024 Global Market Outlook 8

 Broadening equity horizons

Global equity markets are likely to remain technology stocks (Figure 6), propelled
challenged in 2024 as the world transitions by their above average earnings
to a regime of higher trend inflation and performance and rising expectations for
interest rates. This transition could generate artificial intelligence (AI) applications.
shifts in earnings growth expectations, Through November, the Magnificent
triggering volatility. Close attention to risk Seven stocks collectively were up
management will be needed. over 70% for the year to date on a
capitalization‑weighted basis. The
On the plus side, broader, less remaining 493 stocks in the S&P 500,
concentrated market leadership is likely on the other hand, rose less than 9.5%
to provide more varied sources of returns (Figure 6). Such highly concentrated
for investors who maintain a sharp focus markets increase risk, particularly for
on valuation fundamentals. investment strategies measured against
benchmarks that require them to maintain
Although U.S. equity valuations appear exposure to these outsized positions.
more reasonable, they continue to face
stiff competition from attractive yields on Stretched valuations, produced by their
money market and short‑term fixed income strong performance, leave the U.S. tech
assets. This suggests a need to look for giants vulnerable to mean reversion—
pockets of attractive relative valuation. the historical tendency for periods of
above‑average performance to be followed
Global equity performance in 2023 was by subpar returns. Accordingly, we believe
predominantly driven by the so‑called mega‑cap tech leadership is likely to fade
“Magnificent Seven” mega‑cap U.S. in 2024 as the opportunity set broadens.

U.S. equity performance has been top‑heavy, but that could change in 2024
(Fig. 6) Cumulative returns through the first 10 months of 2023.
80 Magnificient Seven*
70 S&P 500 Index ex Magnificent Seven
Mid-Cap (S&P 400)
60
Cumulative Return (Percent)

Small-Cap (S&P 600)

50

40

30

20

10

-10

-20
Dec. 2022 Jan. 2023 Feb. 2023 Mar. 2023 Apr. 2023 May 2023 Jun. 2023 Jul. 2023 Aug. 2023 Sep. 2023 Oct. 2023 Nov. 2023
As of November 30, 2023.
*
The Magnificent 7 are Apple, Alphabet, Amazon, Meta, Microsoft, NVIDIA, and Tesla. Performance results shown are capitalization‑weighted averages.
The specific securities identified and described are for informational purposes only and do not represent recommendations.
Source: Standard & Poor’s (see Additional Disclosures). T. Rowe Price analysis using data from FactSet Research Systems Inc. All rights reserved.
Past performance is not a reliable indicator of future performance.

2024 Global Market Outlook 9

 The world in equities 2024

US Equities
Mega-cap tailwind
expected to fade, but Japan Equities
health care and energy Regulatory reform,
are bright spots governance,
valuations, and macro
European Equities trends all supportive
Economic woes to
weigh on markets, at
least for first half
China Equities
Subdued recovery a
problem but select
EM Equities opportunities in
Attractive valuations high‑tech industrials
combine with fiscal
and monetary stimulus

supply chains also could favor the EMs. under pressure. Companies with more
Regional opportunities Potential beneficiaries include Malaysia, robust margins are likely to navigate this
Indonesia, Brazil, and Chile. environment more effectively but also will
We continue to favor EM equities sell at higher valuations.
over developed equities as relatively Within the developed markets, near‑term
attractive valuations (Figure 7), upside prospects for European equities look less As Europe approaches a business cycle
earnings potential, and the possibility of attractive relative both to other developed recovery that is likely later in 2024, further
incremental fiscal and monetary stimulus markets and to the EMs. As the business opportunities should arise in those
generally are more supportive for the EMs. cycle rolls over, demand is likely to markets, where valuations overall are
A shift away from highly centralized global weaken and profit margins could come likely to still be reasonable.

EM equity valuations appear relatively cheap

(Fig. 7) Forward 12‑month price/earnings (P/E) ratios.*
20 Interquartile Range
19.2 Median
18 Current
10th–90th Percentile

16 16.0
Forward P/E

14.8
14

12 12.0
11.6

10

8
US All Country World Japan Europe EM
As of November 20, 2023.
*Based on consensus earnings forecasts. Actual outcomes may differ materially from forecasts.
Ranges and medians are for the 20 years ended November 2023 using monthly P/Es. U.S. = MSCI
USA Index; All Country World = MSCI All Country World Index; Japan = MSCI Japan Index; Europe =
MSCI Europe Index; EM = MSCI Emerging Markets Index.
Source: Goldman Sachs Investment Research.

2024 Global Market Outlook 10

Sectors in the spotlight 2024

Technology Health Care Energy

Semiconductors with Biomedical devices and Higher energy prices and
leading chip technology obesity treatments, which decarbonization initiatives
and companies could have knock-on effects supportive of both old
supporting AI scaling for food, retail, and hospitality and new energy

Japanese equities continue to look whether policymakers will go further.

relatively attractive. The Japanese yen This uncertainty is reflected in relatively
appears undervalued and will likely low valuations in China’s equity markets.
appreciate should the BoJ change its
monetary policy. While a stronger yen While the direction of economic growth in
historically has been seen as a negative China is uncertain, excessively negative
for the export‑driven Japanese economy, sentiment could produce selective equity
its potential impact going forward is opportunities in 2024 in sectors benefiting
unclear given the positive momentum from the technological upgrade of China’s
and potential for repatriated flows by industrial base, including electric vehicles,
domestic investors. For foreign investors, semiconductors, and higher‑value
however, Japan has the triple merits of industrial products.
reasonable valuations, a cheap currency,
and structural reform.
Key sector themes

Technology/AI: The extent to which richly

valued U.S. tech giants can demonstrate
clear benefits from AI may influence
how much pressure they come under in
...we believe AI has 2024, as these firms race to acquire new
capabilities and refine existing ones. But,
the potential to in contrast to the internet boom of the
1990s, when a relatively small number of
enhance productivity firms reaped the bulk of the benefits, we
believe AI has the potential to enhance
across a wide range productivity across a wide range of sectors
and companies.
of sectors and
Attractive opportunities could include
companies. semiconductor companies that are
developing leading‑edge chips, tech
service firms that help companies
scale and enhance their AI capabilities,
The growth outlook for China is less and data centers that benefit from
positive, as efforts to stimulate demand increased demand.
so far have been relatively ineffective.
Beijing’s decision to allow its 2024 budget Health Care: Innovation—from
deficit to exceed 3% of GDP was a step bioprocessing to medical devices to
in the right direction, but it’s not clear new treatments for obesity—also could

2024 Global Market Outlook 11

generate significant equity opportunities countries and firms push ahead with
in 2024. The U.S. Food and Drug decarbonization programs. Many EMs
Administration’s approval of a class are heavily concentrated in energy and
of diabetes medications for use as commodity‑related sectors, so these
weight‑control drugs has the potential not markets should benefit if renewable energy
only to change patient outcomes, but to projects fuel a capital spending boom.
remake health care economics, given that
obesity is a contributing factor to many The longer‑term outlook for commodity
other conditions. These advances also producers could improve as prices adjust
could have longer‑term implications for upward due to peaking productivity and
the food, retail, and hospitality sectors as higher production costs. Geopolitical risks
structural patterns adapt. also are likely to keep energy prices high
even as supply expands—with positive
Energy and Commodities: Energy and implications for industry profitability.
other commodity‑related stocks could
prove to be attractive hedges in 2024 if These factors do not necessarily mean
inflation is stickier than expected and/or that global commodities are entering a
if geopolitical factors trigger another new bull market, but do imply that we may
energy price shock. These sectors also be past the trough of the long‑term cycle.
could be a major focus for investors as

Broadening equity horizons

Investment Idea Rationale Examples

Expect a broadening in market Despite near‑term economic uncertainty, some sectors are — Technology stocks
leadership and more varied benefiting from innovation and the need to transition to renewable — Health care stocks
sources of return. energy sources. — Energy stocks

Consider attractively valued Key drivers of Japan’s market recovery—regulatory reform, — Japanese stocks
regions with structural tailwinds. improved corporate governance, better capital allocation, and — EM stocks
closer attention to shareholder returns—remain positives. EMs
could benefit from fiscal and monetary stimulus.

For illustrative purposes only. This is not intended to be investment advice or a recommendation to take any particular investment action.

2024 Global Market Outlook 12

2024 tactical allocation views
Underweight Neutral Overweight

These views are informed by a subjective assessment of the relative attractiveness of asset classes and
subclasses over a 6‑ to 18‑month horizon.
Valuations are broadly neutral with pockets of opportunity. We expect earnings to remain resilient in
Stocks
Asset Class

the near term, but global growth remains uncertain due to lagged effects of tighter monetary policy.
Yield levels are attractive relative to recent history. However, increased supply and sticky inflation
Bonds
could be headwinds, particularly for longer-term bonds. Credit fundamentals remain supportive.
With many central banks on hold, cash and cash equivalents provides liquidity and continues to offer relatively
Cash
attractive yields. However, the trajectory of easing could drive yields lower in the back half of the year.

Equity Regions

Earnings growth expectations for 2024 approach double digits as U.S. economic activity has proven
U.S.
resilient thus far. Valuations are full. Higher rates will pressure companies with high interest expenses.
Valuations are attractive on a relative basis, but the growth outlook remains challenged for some major
Global Ex‑U.S.
economies, particularly Europe and China. Lower rates could support more rate-sensitive economies.
Valuations and currencies are attractive. Monetary easing could support growth. Chinese equities reflect
Emerging Markets
headwinds amid housing sector concerns, but other regions should benefit from rebounding exports.

Style and Market Capitalization

Moderating growth could be a headwind for cyclical sectors. Momentum surrounding AI and
Equities

U.S. Growth vs. Value*

weight‑loss drugs should provide structural tailwinds for growth, but valuations are challenging.
Global Ex‑U.S. Growth Value stocks are attractively priced, and commodities and financials could benefit from stickier
vs. Value* inflation. Growth stocks are relatively expensive and could suffer from weakening demand in China.
U.S. Small‑ Small‑caps are attractive as valuations already price in a significant economic downturn. However,
vs. Large‑Cap* elevated leverage, narrow margins, and near-term refinancing needs mean that higher rates remain a risk.
Global Ex‑U.S. Small‑ Small-cap valuations are relatively attractive. Signs of growth stabilization and easing central bank
vs. Large‑Cap* policies could be catalysts for reentry.

Inflation Sensitive

Commodity-related equities are cheap and offer a hedge against potentially stickier inflation and
Real Assets Equities
energy price shocks. Oil prices may be set for structural increases due to peaking productivity.

Yields are broadly attractive. We favor core and shorter duration as long-term bonds could remain
U.S. Investment Grade
vulnerable to inflation and heavy new supply. Credit fundamentals remain supportive.
Developed Ex‑U.S. IG Global central banks appear to be near peak tightening as inflation shows signs of slowing. Yields look
(Hedged) attractive on a USD‑hedged basis.
Longer‑term yields likely are near a peak but remain vulnerable to increased supply and sticky inflation.
U.S. Treasury Long
Treasuries should offer ballast to risk assets as correlations are expected to decline.
Break‑even yields reflect a continued deceleration in inflation. Signs of inflation reaccelerating could
Inflation Linked
Bonds

present a reentry point.

Attractive yields should provide a cushion if spreads widen. Credit fundamentals remain strong, and
Global High Yield
while default rates could rise, we do not expect them to exceed their historical averages.
Valuations and yields remain attractive. But the rate resetting feature and lower duration profile of
Floating Rate Loans
loans become less attractive as we near peak rates.
Yields are still attractive, and moderating inflation and peaks in central bank tightening cycles both
EM Dollar Sovereigns
should be supportive. A weaker U.S. dollar should be positive for EM economies.
EM local bonds and EM currencies are both attractively valued. Expectations for central bank easing,
EM Local Currency
lower inflation, and a potential upside for growth should support the sector.

*For pairwise decisions in style and market capitalization, boxes represent positioning in the first asset class relative to the second asset class. The asset
classes across the equity and fixed income markets shown are represented in our multi-asset portfolios. Certain style and market capitalization asset
classes are represented as pairwise decisions as part of our tactical asset allocation framework.
This material is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any particular
investment action. Information and opinions, including forward‑looking statements, are derived from proprietary and nonproprietary sources
deemed to be reliable but are not guaranteed as to accuracy.

2024 Global Market Outlook 13

T. Rowe Price cautions that economic estimates and forward-looking statements are subject to numerous assumptions, risks, and
uncertainties, which change over time. Actual outcomes could differ materially from those anticipated in estimates and forward-looking
statements, and future results could differ materially from any historical performance. The information presented herein is shown for
illustrative, informational purposes only. Forecasts are based on subjective estimates about market environments that may never occur.
Any historical data used as a basis for this analysis are based on information gathered by T. Rowe Price and from third-party sources and
have not been independently verified. Forward-looking statements speak only as of the date they are made, and T. Rowe Price assumes
no duty to and does not undertake to update forward-looking statements.

Investment Risks
Fixed-income securities are subject to credit risk, liquidity risk, call risk, and interest-rate risk. As interest rates rise, bond prices
generally fall. Investments in high-yield bonds involve greater risk of price volatility, illiquidity, and default than higher-rated debt
securities. Because of the nature of private credit there may be heightened risks for investors, such as liquidity risk and credit risk to
the underlying borrower and investments involve greater risk of price volatility, illiquidity, and default than higher-rated debt securities.
International investments can be riskier than U.S. investments due to the adverse effects of currency exchange rates, differences in
market structure and liquidity, as well as specific country, regional, and economic developments. These risks are generally greater
for investments in emerging markets. Small-cap stocks have generally been more volatile in price than large-cap stocks. Mid-caps
generally have been more volatile than stocks of large, well-established companies. Investing in technology stocks entails specific
risks, including the potential for wide variations in performance and usually wide price swings, up and down. Technology companies
can be affected by, among other things, intense competition, government regulation, earnings disappointments, dependency on patent
protection and rapid obsolescence of products and services due to technological innovations or changing consumer preferences.
Health sciences firms are often dependent on government funding and regulation and are vulnerable to product liability lawsuits and
competition from low‑cost generic product. Commodities are subject to increased risks such as higher price volatility, geopolitical and
other risks. There is no assurance that any investment objective will be achieved. Alternative investments typically involve a high degree
of risk, may be illiquid, may undertake more use of leverage and derivatives, and are not suitable for all investors. Diversification cannot
assure a profit or protect against loss in a declining market.

2024 Global Market Outlook 14

 T. Rowe Price identifies and actively invests in opportunities to help people thrive in an
evolving world, bringing our dynamic perspective and meaningful partnership to clients
so they can feel more confident.

Additional Disclosure
© 2023 CREDIT SUISSE GROUP AG and/or its affiliates. All rights reserved.
Copyright © 2023, S&P Global Market Intelligence (and its affiliates, as applicable). Reproduction of any information, data or material, including ratings
(“Content”) in any form is prohibited except with the prior written permission of the relevant party. Such party, its affiliates and suppliers (“Content
Providers”) do not guarantee the accuracy, adequacy, completeness, timeliness or availability of any Content and are not responsible for any errors or
omissions (negligent or otherwise), regardless of the cause, or for the results obtained from the use of such Content. In no event shall Content Providers
be liable for any damages, costs, expenses, legal fees, or losses (including lost income or lost profit and opportunity costs) in connection with any use
of the Content. A reference to a particular investment or security, a rating or any observation concerning an investment that is part of the Content is not
a recommendation to buy, sell or hold such investment or security, does not address the suitability of an investment or security and should not be relied
on as investment advice. Credit ratings are statements of opinions and are not statements of fact.
CFA® and Chartered Financial Analyst ® are registered trademarks owned by CFA Institute.

Important Information
This material is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any particular
investment action.
The views contained herein are those of the authors as of December 2023 and are subject to change without notice; these views may differ from those
of other T. Rowe Price associates.
This information is not intended to reflect a current or past recommendation concerning investments, investment strategies, or account types, advice
of any kind, or a solicitation of an offer to buy or sell any securities or investment services. The opinions and commentary provided do not take into
account the investment objectives or financial situation of any particular investor or class of investor. Please consider your own circumstances before
making an investment decision.
Information contained herein is based upon sources we consider to be reliable; we do not, however, guarantee its accuracy.
Past performance is not a reliable indicator of future performance. All investments are subject to market risk, including the possible loss of
principal. All charts and tables are shown for illustrative purposes only.
T. Rowe Price Investment Services, Inc.
© 2023 T. Rowe Price. All Rights Reserved. T. ROWE PRICE, INVEST WITH CONFIDENCE, and the Bighorn Sheep design are, collectively and/or apart,
trademarks of T. Rowe Price Group, Inc.

ID0006508 (12/2023)
202312‑3254809 15