The GIV elaborates on the latest views, convictions and outlook of our Global CIOs, Investment Platforms and the Amundi Investment Institute.

The Fed’s employment mandate taking centre stage

US bond yields have declined over the past couple of months, and gold has touched records levels. Global and US equities have also reached new highs on the back of expectations of continued economic strength in the US, the monetary easing cycle, earnings resilience, and AI-led momentum. We see an inherent contradiction here, but agree with the monetary easing aspect. The contradiction arises from the view that if the Fed implements rate cuts mainly to address a slowing economy, then the effects of a slowing economy should already be evident in weak labour markets, consumption, and eventually in corporate earnings.

Benefit from income potential in credit

We are witnessing an odd combination of slowing economic growth in the US and some risk assets reaching record levels. In the Eurozone, the impact of US tariffs and German fiscal boost on growth is yet to be seen. Amid all this, the Fed has initiated its rate cut cycle, despite no signs of recession. Even the ECB, which we expect to stay data-dependent, will likely reduce policy rates as we enter the year-end phase.

A pinch of salt on AI-euphoria

US markets, and to some extent global stocks, have been led by positive newsflow around the AI theme, but we believe markets are over-optimistic on the massive capex plans around this theme. The key question is: what if something cheaper (like the ‘DeepSeek moment’) and faster emerges, and how could that affect the return on investment? Additionally, fiscal expansion and central banks cutting rates are adding to that enthusiasm. To us, this presents the biggest vulnerability.

Emerging markets in a multi-polar world

Although the US’s economic clout remains dominant, EM countries that can adapt and position themselves around new technologies (such as AI in China) and the reshaping of global supply chains (such as India) will be the beneficiaries of this shift towards multipolarity. More recently, for us, the main topic of internal debate has been the dollar weakness and how the Fed’s monetary easing and Trump’s policies and pressure could affect the currency.

Fine-tune duration amid evolving inflation

US economic activity is likely to slow in the second half of the year due to weak consumption, which is a dominant part of the economy. We also expect some resilience in inflation in the near term. Even in the UK, the Central Bank is grappling with an uptick in price pressures. In Europe, however, the environment is slightly different in the sense that inflation is under control for now. On risk assets, while valuations are high in some segments, we maintain a slightly positive risk stance (without bold calls) led by fundamentals and earnings potential. At the other end, we reiterate the need for hedges on equities and other portfolio diversifiers/stabilisers such as gold.

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