Regional Macro Views
United States
Solid GDP growth, but resilience is increasingly dependent on AI capex and wealth-effect spending by upper-income households. A reversal in AI enthusiasm could expose underlying fragility.
China
Apparent stability masks a housing crisis, weak domestic demand, and export dependency. Meaningful structural reforms remain unlikely, keeping fragility elevated.
Eurozone
The Iran conflict set back a nascent recovery. Rising defense budgets are a bright spot, driving industrial activity and tech investment across the region.
Japan
Corporate reforms continue to lift returns on capital. Markets will focus on fiscal stimulus, monetary policy, bond yields, and geopolitical tensions with China.
Looking ahead: what to expect over the next several years
1. A Weaker U.S. Dollar
As investors reassess their concentration in U.S. assets, currency hedging will increase first — then, over time, non-U.S. holders of U.S. Treasuries are likely to reduce their relative exposure.
2. Steeper Developed Market Yield Curves
Widening fiscal deficits across the U.S., Europe, and Japan will push yields higher at the long end. EM sovereign debt and hard assets like infrastructure stand to benefit as investors seek alternatives.
3. Stronger Relative Performance of Non-US Equity Markets
A bullish outlook for non-U.S. markets, where valuations are more attractive — particularly in emerging markets and Japan. Meanwhile, the concentration of U.S. equity gains in a narrow set of tech names remains a risk worth monitoring.
