An era of conflicting choices

Global equities reached all-time highs in October, led by strong momentum in the AI sector in the US, expectations of Fed easing, and positive sentiment around fiscal expansion in Germany. However, a resurgence of the US-China trade spat, concerns over some credit events in the US, and continuing US government shutdown created volatility in risk assets. While the US and China have extended their truce, we’d like to see how effectively this is sustained in the long term.

This uncertainty earlier boosted the safe-haven appeal of bonds, pushing down yields in US, Europe, and the UK. Concerns persisted, however, over the effect of government spending on deficits, debt and fiat currencies in the long term (debasement). As a result, gold touched record levels, although prices have retraced. Fiscal risks were also evident in Japanese yields, and caused a sharp fall in the yen.

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Monica Defend

Monica Defend

Head of Amundi Investment Institute

Much of the developed world would maintain fiscal expansion, whereas China is moving in the opposite direction of reducing excess capacity to shift towards a domestic consumption-led growth model.

Monica Defend, Head of Amundi Investment Institute

Watch out for US inflation expectations

investment

Watch out for US inflation expectations

Consumption pressures in the US may affect economic activity there as effects of US tariffs materialise. On the other hand, while inflation expectations are still under control, an expansionary fiscal policy, a Fed inclined to cut rates and US tariffs passthrough to inflation in the real economy may change that. Hence, curves will steepen further. In Europe, inflation doesn’t seem to be an issue, but domestic demand could be.

Furthermore, we think emerging markets should be able to withstand the US-China geopolitical competition in the long term, but we could witness some volatility around trade negotiations. We also believe EM will gain from rate cuts by the Fed and a weaker dollar in the medium term. In corporate credit, we continue to explore high carry and balance that with quality.

 



 

 

Earnings resilience is the engine of growth

Equities have delivered strong performance since the beginning of September on the back of multiple factors, including the AI sentiment. An important consideration for us is to what extent AI could boost corporate earnings and how much of a valuation premium is justified for such businesses. Thus, while we believe in the long-term potential for such technology to enhance productivity, we are unwilling to pay excessive valuations.

Our aim remains to identify businesses that provide a good balance of earnings, valuations and product differentiation. We find more such businesses in Europe, the UK, Japan and emerging markets, and in the value segment in the US. In particular, given the global trade uncertainty, we look for companies that are more exposed to domestic demand in these regions.

 


 

Earnings resilience is the engine of growth

stacking coins

Risk on: adjustments to duration, gold

GIV MAY EM

Risk on: adjustments to duration, gold

The US economy has remained resilience so far, but trade policies and tariffs are complicating the outlook with respect to their effect on consumption and inflation. In Europe, pressures on exports are visible and domestic demand may also show some vulnerabilities. Despite that, the overall economic environment is not of a recession. In this environment, central banks are willing to cut rates and governments are providing fiscal support. However, headwinds in the form of trade tensions, geopolitics and valuations persist. Hence, we believe there is a need to reinforce hedges.

Changes vs previous month

  • Equities: Regionally, turned neutral on US, less negative on US growth style, and slightly less constructive on Europe.

  • Multi asset: Less positive on US duration and gold. Downgraded BRL and MXN to neutral vs the CNH, and strengthened views on other hedges.

  • FX: In a tactical move, we turned neutral on the USD, and less optimistic on the yen.

2025-11-17

Global Investment Views - November 2025

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