Disinflation and political risk are the two key themes driving market movements, according to the latest quarterly update from Aviva Investors.
"We expect the next 12 months to be somewhat of a tug-of-war for markets, as the disinflation process slows, while political risks rise," says Michael Grady, head of investment strategy and chief economist at the asset manager.
"On the one hand that could be supportive of risk assets while limiting the extent of rate cuts as inflation only slowly falls back to 2%.
"On the other hand, election outcomes that result in more isolationist policies could result in increased market volatility and a more challenging environment for risk assets."
Looking into the coming few months, Grady says Aviva has a "moderately overweight" c"However, with the main political risk likely to come with the US elections in November, we expect a more cautious allocation may be necessary as it approaches."
The asset manager predicts that global growth will slow very slightly to around 2.7% across 2024, marking a small decrease on the 2023 figures of 3%.
Grady said the equities tilt is towards "quality and growth markets, such as Japan and the US on a country level.
"Their stock markets are more expensive than the UK and the Eurozone, and concentration risk is a concern, but 'cheap' markets on simplistic valuations do not automatically augur value. "
He's probably talking about the UK there, where shares are "cheap" but have remained so for several years.
Aviva's investment team view on government bonds is generally neutral as "their negative carry relative to cash, inverted yield curves, and positive correlation to risky assets making them poor diversified".