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