At a glance
Economics
- Trump's tariff chaos is weakening the US. But monetary and fiscal policy are allowing US growth of around 1.5%.
- Core inflation rates remain too high. Central banks have limited scope to cut interest rates.
- Europe: More momentum after trade conflicts subside. ECB and German spending boosts economy.
Equities
- Global equity markets remain robust despite weaker seasonal trends in September and high positioning.
- Interest rate and tax cuts in the US and improved earnings momentum should support the markets in the medium term.
- Higher yields and a weaker labour market pose risks. However, we view setbacks as an opportunity.
Bonds
- In addition to political pressure, the Fed is facing increased inflation risks and a weakening labour market.
- Robust fundamentals and sustained fund flows favour credit. However, tight spreads call for caution.
- Emerging markets look fundamentally sound. Local currency bonds are likely to benefit from currency and curve effects.
Commodities
- Gold remains in demand amid rising government debt and higher inflation. Short term, gold seems to be overbought.
- OPEC+ continues to turn up the oil tap as part of its strategy to gain further market share. Supply continues to rise.
- Without an economic upturn, industrial metals are likely to further trend sideways. Structural drivers remain intact.
Currencies
- The weakening economic momentum and further interest rate cuts by the Fed will weigh on the dollar.
- Trump's criticism of the Fed and the ongoing increase in debt are also putting pressure on the dollar.
- Despite the Swiss National Bank's zero interest rate policy and the US tariff hammer, the Swiss franc remains stable.
