Diverging market signals

Over the past month, stock and bond markets have been driven by diverging forces. Bond yields have risen at the short end due to inflation pressures and more hawkish central banks, while long-end yields have climbed on higher term premiums amid Middle East uncertainty and ongoing high fiscal deficits.

Equities, however, have been less affected by the war. Markets rebounded from their March lows, although the rally has been largely driven by a few themes (energy, hyperscalers, memory chips), a handful of artificial intelligence-linked (AI) names and the prospect of productivity gains, which we think will only happen over the long term.

To us, the diverging narratives between bonds and equities signal the difficulty of assessing the impact of disruption to traffic flow through the Strait of Hormuz. In addition, it highlights the uncertainty around second-round economic effects – the transmission of the crisis from energy and logistics to inflation, growth, corporate margins and business and consumer confidence.

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Monica Defend

Monica Defend

Head of Amundi Investment Institute

Markets have recently been driven by diverging forces. Yields have risen due to Middle East risk and central bank expectations, while equities have rebounded thanks to an AI-led rally.

Monica Defend, Head of Amundi Investment Institute

Shifting rate dynamics amid inflation

investment

Shifting rate dynamics amid inflation

Since the beginning of the Iran war, bond markets have come under pressure from a combination of factors. Inflationary pressures have started to re-emerge, pushing short-term rates higher, while fears that weaker growth and higher support measures will weigh on public finances and bond supply have put upward pressure on long-term rates.

These inflation pressures are making central banks (ECB, BoE) a bit more hawkish. We believe these banks could raise rates, but without starting a hiking cycle. Hence, we remain positive on duration overall but are applying a more selective lens across geographies and yield curves. Additionally, we maintain our overall curve steepening views but acknowledge higher near-term uncertainty due to ambiguity over monetary policy actions.
 



 



 

 

Global opportunities, greater resilience

The market rally has been driven by lower oil prices, Middle East deal expectations and AI-related tech earnings. However, commodity shortages are likely to persist and inflationary pressures will remain elevated in the near term. Hence, our focus remains on businesses that can deliver strong earnings and pass on these higher costs to consumers in order to preserve margins. We are exploring such companies with a global view, particularly in Japan (reflation story), Europe and the emerging markets.

While sentiment in some of these regions has been weakened owing to their reliance on energy imports, the long-term case is intact. In Europe, this crisis will push the region towards achieving strategic autonomy and strengthening energy security as well as supply chains in the long run.


 

Global opportunities, greater resilience

stacking coins

Mildly risk-on, with enhanced protections

GIV MAY EM

Mildly risk-on, with enhanced protections

The growth outlook remains reasonable, although there are signs of divergences between the US and Europe, as well as expectations of above-target inflation in most DM. These inflation concerns are more evident in fixed income. Risk assets, on the other hand, have been driven higher by strong corporate earnings, the AI story, and optimism around a resolution to the Middle East conflict. We remain mildly pro-risk, seizing opportunities created by market moves and a greater need to strengthen hedges.
 

Changes vs previous month

  • Fixed income: Downgraded US duration to slightly cautious and moved positive on US IG. 

  • Equities: Tactically reduced our views on Latin America, emerging EMEA and India.

  • Multi asset: Slightly less positive on EU IG due to spread tightening, and reduced our constructive stance on YEN vs CHF. 

2026-06-12

Global Investment Views - June 2026

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