• Markets continue to embrace moderating inflation trends, allowing scope for central banks to lower interest rates modestly while delivering a soft landing for the global economy. That sentiment is vulnerable to challenge.

• The onus will be on inflation outcomes to validate market expectations, with core inflation measures globally still elevated and slow to return to target.

• Growth in New Zealand is weak, and inflation pressures are receding, allowing scope of an eventual loosening of monetary policy. Timing remains uncertain.

• Election and political risk are expected to become more relevant internationally, with half the world’s population and around 60 countries going to the polls in 2024.

• The diversion of sea traffic from the Red Sea to around the Cape of Good Hope is a reminder of geopolitical frictions, which have lifted freight rates, and represent another small “supply shock” on top of what is becoming repeating supply shocks.

• The path returning inflation to target still faces geopolitical challenges, and labor markets remain very tight adding to service inflation.

• There appear a wider than normal array of views over the macroeconomic outlook in 2024, which supports diversification in portfolios, and increasing attention to microeconomics such as business fundamentals and valuations.