H2 2025 | Investment themes
MIND THE sequencE |H2 2025
Tipping point in fixed income Rising fiscal risks in the US are leading to high volatility in US Treasuries and the dollar. Stay agile and look at European and EM bonds in search for a better income and risk profile.
Time for Europe Europe's focus on strategic autonomy is gaining traction opening up long-term opportunities for investors in equities, mid-caps, and defence.
Long-term themes in a fragmented world A fragmented and increasingly conflicted world may drive greater defence spending, stronger strategic autonomy, a renewed focus on rare earths, and intensified competition in the tech race.
Equities in the global trade rewiring With concentration risks still high and valuations stretched in US mega caps, explore emerging themes from the global rewiring, shifting policies and supply chain shuffling.
India and EM are winners of the rerouting shift India and Indonesia are long-term winners. In the short term, China may benefit from additional stimulus. EMs are expected to outperform DMs.
Keep on diversifying with real and alternatives These assets are key in a world of high uncertainty and inflation risks. Considering the surge of capital being invested in these segments, extra selectivity is required.
JUNE 2025
Market focus on US growth/inflation mix
Summer turning point
Fragile balance between positive sentiment for a pause in tariffs and rising concerns over the fiscal trajectory.
Fiscal package and end of the tariff pause could lead to differing outcomes.
Benign tariffs and fiscal mix
Tariffs become the new normal and budget law impacts low-income segments
Excessive fiscal push and/or tariff escalation
UPSIDE SCENARIO
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MAIN SCENARIO
DOWNSIDE SCENARIO
UPSIDE SCENARIO
More disinflation with productivity gains: A positive mix of no additional tariffs and a smaller fiscal push improves the growth/inflation mix forecasts for 2026 (2025 still in slowdown) Market implications: Positive for risky assets, long-term rates may offer some entry points, Fed can start cutting rates as inflation slows
Sub-par growth with sticky inflation: Tariffs remain at current levels, expenditure cuts affect low-income segments Market implications: Steepening yield curve, positive on investment-grade credit, inflation protection, mildly positive for risk assets, weaker USD.
MAIN SCENARIO
Fragmented stagflationary environment: Real yields and inflation expectations rise further, consumption decelerates, the Fed stays on hold Market implications: Negative for US assets and govies, positive for gold,
commodities, dividend stocks, and linkers
DOWNSIDE SCENARIO
