Market Compass July 2025

Highlights:

• Global markets stayed resilient in Q2 despite US tariffs and Middle East tensions, thanks to positive economic surprises.
• Growth may slow into autumn due to weaker manufacturing, tariff effects on US consumers, and softer earnings. Still, recession risks remain low.
• We expect FX volatility and a weaker USD this summer, favoring long EM positions and credit overweights. IG credit continues to rival sovereigns as a safe haven.
• Views on rates and equities are mixed. We see bond yields drifting lower, but keep short duration due to supply and inflation. We hold a small equity overweight, with hedging advised by late July.

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