Highlights:

• “Immaculate disinflation” is getting increasingly consensual and brightening the 2024 market outlook, leading to a further increase in risk appetite.
• Rate cut expectations are flattening out. 2H23 US economic strength has likely caused complacency about actual risks, helping risk assets to perform positively again in January.
• Stagflationary geopolitical risks in the Middle East may challenge the increasingly consensual Goldilocks view (continued disinflation, resilient growth).
• Even with a soft landing more likely, we see limited value in extending risk-taking right now – we prefer safer buckets in Fixed Income (IG) and tactically raise cash exposure.

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