Read the highlights of this week’s commentary from Helios:

  • As the year ended, the S&P 500 Index flirted with all-time highs. In 2024, equity markets are expected to hit new records if the Federal Reserve achieves a soft landing.
  • Small-cap stocks may rebound in 2024, as analysts see the potential for a resurgence due to their current low valuations and cyclical nature. The Russell 2000 Index is still down 17% from its high in late 2021, but experts believe these undervalued stocks may recover as market conditions improve.
  • The Fed’s decision to adopt a more relaxed monetary policy in 2024 has led bond strategists to forecast a decline in the 10-year Treasury yield to 3.98% by this time next year.
  • Although swap traders anticipate rate cuts by March 2024, there’s skepticism about the Fed’s control over inflation, hinting at possible delays in rate reductions until May or later, with concerns that markets have already priced in the anticipated policy changes.
  • Bloomberg analysts are forecasting a weaker dollar in 2024 due to expected Fed cuts and a stable US economy encouraging overseas investment. Others believe the dollar will strengthen as other economies will need to cut rates to bolster their economic growth.

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