Capital Market Expectations and Economic Growth

As a lead economist at a financial advisory firm, you have been studying various indicators to form capital market expectations for your clients. Recently, you concluded that the real GDP growth rate is expected to stabilize at a lower level than in previous years due to demographic shifts and lower productivity growth. Meanwhile, inflation is projected to remain moderate due to effective monetary policies. In this context, you are considering how these expectations will affect equity returns, fixed income yields, and overall portfolio strategies.

Which of the following outcomes is most likely based on these expectations?