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Higher rates may be supportive of debt returns, but debt servicing could become an issue.
By Robin MARTIN, Global Head of Investment Strategy Research, Real Assets, LGIM
LGIM’s central case remains a recession for the US, Europe and UK in the first half of 2024. What does this mean for real assets?
Weaker GDP growth is likely to lead to lower demand for cyclical businesses and the more economically sensitive areas of real estate and infrastructure, such as offices and transportation, in our view. Conversely, residential property, utilities and social infrastructure are relatively uncorrelated to the economic cycle.
The flipside of higher rates is attractive debt returns. With...
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