Tactical Investment Strategy — January 2024

January 17, 2024 — Tactical Investment Strategy provides an overview of key economic and policy themes and how Sage is tactically positioned in the current market environment.

Key Takeaways

• Strong economic momentum in the back half of 2023 and expectations of a Fed pivot have provided an optimistic tone to the consensus macro view, but we see a challenging backdrop ahead.
• Our base case is a “softish” landing with weak growth, as consensus predicts, but a higher probability of one or two quarters being pushed into modestly negative territory.
• Heading into 2024 we are focused on quality. Rate cuts are coming, yields will fall this year, and when combined with coupon carry, this should translate into strong fixed income returns. As such, we are overweight fixed income in our balanced allocations, and we expect core fixed income and municipals to reap strong returns in 2024. In equities, we are tilted toward high-quality exposure and regions with more discounted valuations and lower betas.