The GIV elaborates on the latest views, convictions and outlook of our Global CIOs, Investment Platforms and the Amundi Investment Institute.
Keep it turning, faster
Since the start of the year, several of the key convictions we highlighted in our outlook have been playing out, and some trends have clearly accelerated. Markets have remained well supported, with significant rotations at country, sector and stock levels.
Geopolitical fragmentation and controlled disorder remain central themes, as the recent escalation in the Middle East has shown. The situation remains fluid and, for now, is best characterised as a military shock with uncertain political ramifications. Oil prices â the principal macro transmission channel â already appear to reflect a largely temporary geopolitical risk premium.
Rates to remain range bound
We believe that, while disinflation will continue in the US, the overall inflation will remain between 2.5% and 3% this year, which is above the Fed target. Hence, in the very near future the Fed is likely to remain on hold. Around mid-year, when there is more visibility on inflation, the Fed may reduce rates.
At the same time, we donât see Fed pivoting towards a rate hike, because labour markets are not giving any clear indication of improvement. Overall, rates will remain range-bound. In Asia, Japan is an outlier, and we are monitoring how the fiscal/monetary policies evolve. Overall, we stay balanced, with slightly positive views on corporate credit, EM bonds and a selective stance on duration across DM.
AI disruption may support rotation
The global macro environment is decent, but tariffs have again created uncertainty in this world of controlled disorder. On the market front, volatility in equity markets, including in AI segments, is a reminder of the bona fide questions the market will ask about these companies' competitive moats and their earnings potential. Any progress on this â for example, the development of a new AI model â could result in increased volatility for companies whose business models are at risk of disruption.
We could witness a general trend favouring high-quality companies in industrials versus losers in the technology segments. Our focus remains on building a fundamental view on businesses that could sustain this rotation, and may even benefit from it, particularly in Europe, Japan and EM.
Explore the carry potential in EM
The growth momentum is stronger than expected in the US and Europe, with irregular progress towards the inflation target that could lead the Fed and ECB to stay on hold in the near term. In Japan, PM Sanae Takaichiâs victory gives an additional push to her âSanaenomicsâ agenda that could revamp Japanâs growth potential. Elsewhere, EM show improving financial conditions that could improve their economic pattern. In this context, we have recalibrated our stance to explore carry in EM, maintaining a modestly pro-risk stance.
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