Variations on a theme: Income opportunities in 2024

The last two years have been difficult for most investors, but especially hard for those in fixed income markets. However, the beauty of bonds is that starting yields have a significant influence on future returns, and today’s yields are much higher than we’ve seen for many years.

In this outlook, Ben Bennett contemplates the potential returns for a range of fixed income securities using three different scenarios. The first deals with a 60% probability of a US recession in 2024, the second outlines a 10% chance that interest rates remain higher for longer, while the third scenario paints the picture of a 30% chance of a US soft landing.

Depending on the risk appetite of investors, we believe these scenarios should help guide allocation decisions for the coming year.