Central banks and AI in the driving seat

In September, global bond markets came under pressure amid inflation concerns and hawkish shifts by central banks, while equity markets remained relatively calm, supported by strong economic data and earnings, alongside renewed optimism around AI. 
 

In fixed income, the average yield on global government debt has moved close to 4% – its highest level since 2007. Central bank tightening and hawkish tone increased expectations for further rate hikes, pushing the short end of the curve higher and flattening yield curves. Rising funding needs among governments and corporates are also keeping long-end yields elevated.

 

Oil prices remain news-flow driven. Brent rose to $105 before easing towards $90. Understanding whether rerouting efforts in the Middle East will be sufficient is becoming increasingly important for commodity markets. 

 

Equity markets proved less volatile, as higher-rate headwinds were partially offset by renewed optimism on AI-theme for new product launches, continued infrastructure spending and positive earnings data. 

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Monica Defend

Monica Defend

Head of Amundi Investment Institute

We still see risky assets supported by the profit cycle and economic conditions, as long as benign credit and liquidity conditions persist. However, we recognise increasing risks related to rate volatility and geopolitical uncertainty.

Monica Defend, Head of Amundi Investment Institute

More nuanced positioning

investment

More nuanced positioning

September saw major central banks take action. After a period of hawkish rhetoric, the Fed finally rose rates, alongside similar moves by the ECB and the Bank of Japan. Markets reacted by lifting interest rate expectations and pushing up short-term rates. On top of this, the long end continued to come under pressure amid economic resilience and issuance pressures, which have pushed real rates to attractive levels.
 

Looking ahead, we remain selectively constructive on duration, preferring short-to medium term maturity bonds while remaining cautious on the long end. 

 

Earnings support equity opportunities

Equity markets were resilient amid hawkish central bank actions, inflation fears and rising bond yields. Indeed, these factors were partly offset by renewed enthusiasm on AI. Looking ahead, as earnings remain strong, the key question is how far equity valuations could be compressed in a rising-yield environment. Hence, our focus is on resilient, non-disrupted business models with balance sheet strength. 

Across regions, we continue to favour areas outside the US as they offer lower concentration and valuation risks. Europe looks attractive relative to the US on earnings momentum, valuation and diversification. We remain positive on Japan, given robust earnings growth and reasonable valuations. EM offer opportunities to diversify across different themes, including energy, technology and structural demand drivers. 

Earnings support equity opportunities

stacking coins

Diversification, selection and carry

GIV MAY EM

Diversification, selection and carry

The broader macro view remains mildly pro-risk, with a preference for regional diversification, selectivity and carry. While growth remains resilient but uneven, inflation appears more persistent and is starting to look more broad-based. Central banks are reacting to this, with markets beginning to price in more rate hikes.


 

Changes vs previous month

  • Multi asset: In equities, we have decided to switch from the S&P 500 Equal Weight to the S&P 500, as the technology sector could be supported going into year-end. In Fixed income, we have moved to a more neutral position on the shape of the US curve, while in Japan government bonds, we have moved from a cautious to a neutral stance as yields have risen sharply this month. 

  • Fixed income: In the US,  we have slightly increased duration, maintaining a steepening bias, with a preference for intermediate maturities and cautious on the long end. In the Euro Area, we have  marginally increased the duration, confirming the steepening bias.  In the UK, we have removed the steepener, following the recent movements. In Japan, we have moved from a cautious stance to neutral, while still favouring a flattening position. 

2026-10-13

Global Investment Views - October 2026

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