We think enthusiasm around AI will return before long and inflate the stock market bubble further over the next year or so, supported by a backdrop of resilient economic growth and monetary easing cycles. In turn, we expect the “big-tech” sectors to return to the front of the pack, helping equities in the US outperform those in most other economies. And we expect equities to outperform most other assets as this bubble inflates.
We think the rallies in many government and corporate bonds have now largely run their course. That said, high interest income means they may still provide good returns over the next few years by past standards. Finally, while we expect energy prices to rise later this year, we ultimately project poor returns from most commodities over the next few years.
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