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Macroeconomic Conditions

The US economy demonstrated robust growth, with a 3.4% annualized increase in Q4 2023 and continued strength into Q1 2024. We also explore economic performance in Europe and China, noting Europe’s recovery from near-recession and China’s Q1 GDP growth of 5.3%, which exceeded expectations.

United States

The US economy continued to perform well thus far in 2024.  

The US economy performed strongly in 2023 and far surpassed other developed economies.  Robust consumer spending, business investment in AI, and significant fiscal spending associated with the Inflation Reduction Act (mainly supporting construction of onshore manufacturing facilities) drove robust growth.

Real GDP increased at a 3.4% annualized level in Q4 2023, and most economists are forecasting 2.0%-2.5% annualized growth on a sequential basis in Q1 2024.  

Employment remains strong although growth seems concentrated in certain sectors (healthcare, hospitality and government) and unemployment rates are ticking up among white collar workers as opposed to blue collar workers.

Wage growth has moderated to roughly 4% annually and the job market appears in better balance with job openings less elevated compared to 2022 and early 2023 and quit rates declining to pre-pandemic levels.


Canada’s economy has strengthened during Q1 2024. 

Real GDP is forecast to have increased by 3.5% annualized, the fastest Q/Q growth in several quarters.

The oil & gas, manufacturing, and finance sectors all contributed to this growth.  

The strength of the US economy has also led to increased demand for Canadian exports.

Economists are forecasting a soft landing with 1.0% Real GDP growth in 2024 (similar to the 1.1% achieved in 2023).   However, Q1 results suggest that growth may surprise to the upside.


Europe’s economy flirted with recession in H2 2023.  However, regional economies have performed better than expected thus far in 2024. 

Manufacturing remains weak with PMI surveys remaining below the 50-level which indicates neither growth or contraction. However, green shoots are emerging with March survey results of 46 (third straight month at this level) relative to the 43-levels seen from July-October in 2023.

Services PMIs returned to positive growth territory in February and March following several months displaying contraction since August 2023.

Unemployment levels remain near historic lows and European consumers have spent less of their excess savings accumulated during the pandemic (in contrast to US consumers).

Unlike in the US, Europe’s inflation is rapidly cooling which should set the stage for several rate cuts in 2024 and an acceleration in growth throughout the year.


China’s Q1 2024 growth exceeded consensus expectations.  However, growth was uneven and several causes for concern remain.

Real GDP grew 5.3% YOY during Q1, beating consensus expectations for 4.8% growth.   Governmental policies aimed at stimulating investment contributed to the Q1 growth.

Investments in infrastructure such as roads and bridges grew 6.5% YOY after growing 6.0% the previous quarter.

The property market remains weak despite various government support measures.  Investments in property development fell 9.5% YOY during Q1 after a 9.0% YOY decline the previous quarter.

Retail sales remain mixed and grew at 4.7% YOY during Q1 although growth slowed sequentially in March.

China is targeting around 5% Real GDP growth for 2024.  Achieving this goal is highly dependent on the levels of government fiscal and monetary stimulus.


Inflation declined rapidly across most major economies in 2023.  However, US inflation has remained higher than expected thus far in 2024.  

The US Core CPI Index increased by 0.4% MOM in January, February, and March (higher than expected).  This follows several months of sub 0.3% monthly increases during H2 2023.  On a YOY basis, Core CPI increased by 3.8%.

Shelter costs (+0.4% MOM and +5.7% YOY) continue to account for most of the inflation growth.  Motor vehicle insurance costs also increased substantially (+2.6% MOM and +22.2% YOY). 

The US Core PCE Index (Fed’s preferred measure) grew at 0.3% MOM in February following a 0.5% MOM increase in January.   These increases followed several months where increases were less than 0.2% MOM.    

While the Core PCE Index increased 2.8% YOY, the recent higher than expected monthly figures increase the chances that rates may need to remain higher for longer to achieve further progress towards the Fed’s 2.0% annual inflation target.

Headline inflation in the Eurozone cooled to +2.4% YOY in March and core inflation cooled to 2.9% YOY as well.  Both figures were below expectations. 

However, inflation in services remained stuck around 4.0% YOY for the past several months pointing to continued pressure from wage growth.

Interest Rates

Interest rate expectations are diverging across major economies.

While the interest rate hiking cycle is likely over for central banks, the current outlook around the timing of rate cuts differs materially across the US and Eurozone.  

Markets now expect fewer US rate cuts in 2024 than originally forecasted and expect the timing of these rate cuts to occur later in the year.

Investors are now projecting 1-2 cuts (vs 3-4 cuts earlier in the year) and now project cuts beginning in September as opposed to March or June.

In contrast, the Eurozone remains on pace for earlier cuts this year (likely in June) as economic growth has been muted and core inflation continues to fall faster than in the US. 

While we acknowledge a wide range of possible outcomes, our current thinking is for 10-year Treasury bonds to range between 3.75% and 4.75% during 2024.   

We believe it is more likely for yields to fall below 4.0% than rise above 5.0%.

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