Global Liquidity Prospects For 2024: Part 1

…. Mr Bond Returns

Overview

Looking into 2024, it will be hard for yield hungry investors to avoid being sucked into government bonds. A 60:40 equity/ bond portfolio could make an unexpected return, but with future monetary inflation highly likely, it still seems a lousy long-term asset allocation. Yet even a prospective temporary asset allocation shift must dampen prospects for traditional risk assets. A near 5% annual US dollar coupon looks attractive from a risk-reward, simply because investors will make money even if yields back up by another 75-100bp. The current huge appetite for yield is evidenced by the vast sums still flowing into losing bond funds.