2024년에 알아야 할 네 가지 경제 테마

Text on screen: PIMCO

Footer Overlay: PIMCO provides services only to qualified institutions, financial intermediaries and institutional investors. This is not an offer to any person in any jurisdiction where unlawful or unauthorized.

Text on screen: Ken Chambers, Fixed Income Strategist

Ken: Tiffany, we always talk about the health of the US economy, global economies with respects to things like just growth and inflation and just general trends. Can you share a few key conclusions from that December conversation we had? And what are we going to be watching for in the year ahead?

Text on screen: Tiffany Wilding, Economic Advisor

Tiffany: Yeah, those are all great questions.  The fact that inflation has come down more convincingly, you are starting to see unemployment rates move up, has given central banks the confidence to shift their communication towards basically saying, we think we're at the top of our rate hiking cycle, and this has had important implications for markets.

FULL PAGE GRAPHIC TITLE: Navigating the Descent: Four economic themes

The chart shows four economic themes: 1) Markets already pricing a substantial cutting cycle; 2) Peak inflation and rising unemployment consistent with rate cuts; 3) Global divergence in monetary policy; and 4) Soft landings are possible, but risks remain.

So markets focus now is obviously on when and how fast cuts will come or central bank easing will come. We think central banks probably will continue to be somewhat more delayed than what markets are pricing.

We think that relative resilience from 2023, will fade away this year in 2024. And that's because the real savings buffers that households accumulated post pandemic as a result of government supports, those are fading away if not having already been depleted. Higher inflation, higher price levels have eroded the real value of households’ total wealth, that's happened at the same time that government policy and fiscal policies are likely to be moderately contractionary in 2024 this year.

And obviously, central banks are still tight and restrictive. So the question is how much deceleration in growth do we expect to see?

And I think that'll differ a little bit across economies but our outlook there hasn't really changed. But in some of the economies that are more dependent on variable rate debt structures, they are more interest rate sensitive. They'll potentially slow more quickly. Canada, Australia, New Zealand, even Sweden, fall into that category. But even if you look to Europe and the UK, those economies also look vulnerable. Their growth has also been tracking much lower, much more stagnant, even mildly recessionary. They're still dealing with the implications of a terms of trade shock due to disruptions on energy and imports from the war in Ukraine.

The growth picture is going to feel a lot different in 2024 we think. That is going to result in labor markets that are continuing to ease. We've already started to see unemployment rates start to tick a little bit higher across developed markets.

Obviously, the vacancy ratios have come more close to pre-pandemic levels, and all of this is resulting in inflation that's fallen pretty dramatically, and we expect that to continue as well. We are projecting that inflation continues to fall, all be at a slower pace, but gets down to the 2.5% to 3% zone where we think central banks can start to cut rates.

Ken: A topic that we spend a lot of time talking about was the risks to a soft-landing outcome or the market, the fact that it's pricing in that soft landing outcome. What risks do we see there?

Tiffany Wilding: Yeah, and that's another great question. Now, one of our main arguments for why we saw elevated recession risks was just that this higher for longer monetary policies strategy that central banks were communicating has historically just not been consistent with soft landings. The soft-landing cycles historically are the hiking cycles that don't coincide with recession. Central banks tend to - they hike to a much lower rate but then they also start cutting more aggressively because you get some positive supply shock that brings inflation down.

So in this cycle we have seen supply sides of economies normalized post pandemic, but central banks were basically telling us they're going to be on hold for a while. And so, that's why we argued there'd be elevated recession risks. Now that we've seen some pivot towards maybe we're going towards easing from the central bank rhetoric, I think that is very consistent with some higher probability of a soft landing. And the markets have priced that in. Nevertheless, we would argue we are not out of the woods yet, right? There are still fat tails on either side of this distribution.

On the one hand, the stagnant growth outlook that we have means - and it's even small, relatively small negative economic shocks can push economies into recession. If you look at Europe, it already looks stagnant to mildly recessionary but nevertheless, on the other side of that elevated inflation risk, there's still the risk that inflation could be sticky. Real wages haven't fully caught up to pre pandemic levels, and you've had productivity that's not really doing that well. I think these elevated inflation risks maybe are most acute in the US where we have had more resilient growth. And certainly, that could continue, so there's a range of possible outcomes here. The markets are very focused on soft landing, but you certainly want to think about those other scenarios when coming up with the outlook.

Text on screen: For more insights and information, visit pimco.com

Text on screen: PIMCO

Disclosure

IMPORTANT NOTICE

Please note that this video contains the opinions of the manager as of the date recorded, and may not have been updated to reflect real time market developments. All opinions are subject to change without notice.

All investments contain risk and may lose value.

Statements concerning financial market trends or portfolio strategies are based on current market conditions, which will fluctuate. There is no guarantee that these investment strategies will work under all market conditions or are appropriate for all investors and each investor should evaluate their ability to invest for the long term, especially during periods of downturn in the market. Investors should consult their investment professional prior to making an investment decision. Outlook and strategies are subject to change without notice.

This material contains the opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

PIMCO as a general matter provides services to qualified institutions, financial intermediaries and institutional investors. Individual investors should contact their own financial professional to determine the most appropriate investment options for their financial situation. This is not an offer to any person in any jurisdiction where unlawful or unauthorized. | Pacific Investment Management Company LLC, 650 Newport Center Drive, Newport Beach, CA 92660 is regulated by the United States Securities and Exchange Commission.| PIMCO Europe Ltd (Company No. 2604517, 11 Baker Street, London W1U 3AH, United Kingdom) is authorised and regulated by the Financial Conduct Authority (FCA) (12 Endeavour Square, London E20 1JN) in the UK. The services provided by PIMCO Europe Ltd are not available to retail investors, who should not rely on this communication but contact their financial adviser. | PIMCO Europe GmbH (Company No. 192083, Seidlstr. 24-24a, 80335 Munich, Germany), PIMCO Europe GmbH Italian Branch (Company No. 10005170963, via Turati nn. 25/27 (angolo via Cavalieri n. 4), 20121 Milano, Italy), PIMCO Europe GmbH Irish Branch (Company No. 909462, 57B Harcourt Street Dublin D02 F721, Ireland), PIMCO Europe GmbH UK Branch (Company No. FC037712, 11 Baker Street, London W1U 3AH, UK), PIMCO Europe GmbH Spanish Branch (N.I.F. W2765338E, Paseo de la Castellana 43, Oficina 05-111, 28046 Madrid, Spain) and PIMCO Europe GmbH French Branch (Company No. 918745621 R.C.S. Paris, 50–52 Boulevard Haussmann, 75009 Paris, France) are authorised and regulated by the German Federal Financial Supervisory Authority (BaFin) (Marie- Curie-Str. 24-28, 60439 Frankfurt am Main) in Germany in accordance with Section 15 of the German Securities Institutions Act (WpIG). The Italian Branch, Irish Branch, UK Branch, Spanish Branch and French Branch are additionally supervised by: (1) Italian Branch: the Commissione Nazionale per le Società e la Borsa (CONSOB) (Giovanni Battista Martini, 3 - 00198 Rome) in accordance with Article 27 of the Italian Consolidated Financial Act; (2) Irish Branch: the Central Bank of Ireland (New Wapping Street, North Wall Quay, Dublin 1 D01 F7X3) in accordance with Regulation 43 of the European Union (Markets in Financial Instruments) Regulations 2017, as amended; (3) UK Branch: the Financial Conduct Authority (FCA) (12 Endeavour Square, London E20 1JN); (4) Spanish Branch: the Comisión Nacional del Mercado de Valores (CNMV) (Edison, 4, 28006 Madrid) in accordance with obligations stipulated in articles 168 and  203  to 224, as well as obligations contained in Tile V, Section I of the Law on the Securities Market (LSM) and in articles 111, 114 and 117 of Royal Decree 217/2008, respectively and (5) French Branch: ACPR/Banque de France (4 Place de Budapest, CS 92459, 75436 Paris Cedex 09) in accordance with Art. 35 of Directive 2014/65/EU on markets in financial instruments and under the surveillance of ACPR and AMF. The services provided by PIMCO Europe GmbH are available only to professional clients as defined in Section 67 para. 2 German Securities Trading Act (WpHG). They are not available to individual investors, who should not rely on this communication. | PIMCO (Schweiz) GmbH (registered in Switzerland, Company No. CH-020.4.038.582-2, Brandschenkestrasse 41 Zurich 8002, Switzerland). The services provided by PIMCO (Schweiz) GmbH are not available to retail investors, who should not rely on this communication but contact their financial adviser. | PIMCO Asia Pte Ltd (8 Marina View, #30-01, Asia Square Tower 1, Singapore 018960, Registration No. 199804652K) is regulated by the Monetary Authority of Singapore as a holder of a capital markets services licence and an exempt financial adviser. The asset management services and investment products are not available to persons where provision of such services and products is unauthorised. | PIMCO Asia Limited (Suite 2201, 22nd Floor, Two International Finance Centre, No. 8 Finance Street, Central, Hong Kong) is licensed by the Securities and Futures Commission for Types 1, 4 and 9 regulated activities under the Securities and Futures Ordinance. PIMCO Asia Limited is registered as a cross-border discretionary investment manager with the Financial Supervisory Commission of Korea (Registration No. 08-02-307). The asset management services and investment products are not available to persons where provision of such services and products is unauthorised. | PIMCO Investment Management (Shanghai) Limited. Office address: Suite 7204, Shanghai Tower, 479 Lujiazui Ring Road, Pudong, Shanghai 200120, China (Unified social credit code: 91310115MA1K41MU72) is registered with Asset Management Association of China as Private Fund Manager (Registration No. P1071502, Type: Other). | PIMCO Australia Pty Ltd ABN 54 084 280 508, AFSL 246862. This publication has been prepared without taking into account the objectives, financial situation or needs of investors. Before making an investment decision, investors should obtain professional advice and consider whether the information contained herein is appropriate having regard to their objectives, financial situation and needs. To the extent it involves Pacific Investment Management Co LLC (PIMCO LLC) providing financial services to wholesale clients, PIMCO LLC is exempt from the requirement to hold an Australian financial services licence in respect of financial services provided to wholesale clients in Australia. PIMCO LLC is regulated by the Securities and Exchange Commission under US laws, which differ from Australian laws. | PIMCO Japan Ltd, Financial Instruments Business Registration Number is Director of Kanto Local Finance Bureau (Financial Instruments Firm) No. 382. PIMCO Japan Ltd is a member of Japan Investment Advisers Association, The Investment Trusts Association, Japan and Type II Financial Instruments Firms Association. All investments contain risk. There is no guarantee that the principal amount of the investment will be preserved, or that a certain return will be realized; the investment could suffer a loss. All profits and losses incur to the investor. The amounts, maximum amounts and calculation methodologies of each type of fee and expense and their total amounts will vary depending on the investment strategy, the status of investment performance, period of management and outstanding balance of assets and thus such fees and expenses cannot be set forth herein. | PIMCO Taiwan Limited is an independently operated and managed company. The reference number of business license of the company approved by the competent authority is (112) Jin Guan Tou Gu Xin Zi No. 015 . The registered address of the company is 40F., No.68, Sec. 5, Zhongxiao East Rd., Xinyi District, Taipei City 110, Taiwan (R.O.C.), and the telephone number is +886 2 8729-5500. | PIMCO Canada Corp. (199 Bay Street, Suite 2050, Commerce Court Station, P.O. Box 363, Toronto, ON, M5L 1G2) services and products may only be available in certain provinces or territories of Canada and only through dealers authorized for that purpose. | Note to Readers in Colombia: This document is provided through the representative office of Pacific Investment Management Company LLC located at Carrera 7 No. 71-52 TB Piso 9, Bogota D.C. (Promoción y oferta de los negocios y servicios del mercado de valores por parte de Pacific Investment Management Company LLC, representada en Colombia.). Note to Readers in Brazil: PIMCO Latin America Administradora de Carteiras Ltda.Av. Brg. Faria Lima, 3477 Itaim Bibi, São Paulo - SP 04538-132 Brazil. Note to Readers in Argentina: This document may be provided through the representative office of PIMCO Global Advisors LLC AVENIDA CORRIENTES, 299, Buenos Aires, Argentina. | No part of this publication may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO is a trademark of Allianz Asset Management of America LLC in the United States and throughout the world. ©2024, PIMCO.

CMR2024-0117-3325999