Global Investment Views - February 2025

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

The Trump 2.0 era is upon us and markets have already become extremely sensitive to inflation data, a trend that will likely last in the coming months. Higher inflation sensitivity has also turned equity/bond correlation back to positive.

1. What is your outlook for the US economy in 2025?
2. What are your views on DM central banks?
3. What are the implications of higher US yields on default rates?

We continue to expect a benign overall economic outlook, with DM countries running at different speeds and China stimulating the economy in an effort to mitigate structural downtrend and tariff risks. In the US, economic growth is normalising, but Trump policies raise uncertainties on various fronts – risks of labour supply shortages due to restrictive immigration policies, tariffs and fiscal policy. In the Eurozone we expect some modest and heterogeneous recovery with downside risks linked to tariffs. All in all, this paints a benign but uncertain outlook, which leads us to remain positive on risky assets, while at the same time we believe investors should increase hedges on equities and favour gold to enhance diversification.  

Trump 2.0 policies are likely to diverge from current market expectations as 2025 unfolds. Inflation will be a key factor in evaluating the Fed's trajectory, with Trump’s policies potentially limiting future Fed easing unless a significant growth shock occurs. At current levels, global fixed income markets provide attractive yields, serving as a buffer against macroeconomic and monetary policy uncertainties, which makes them appealing as income generators and portfolio diversifiers. Global investors should also look at opportunities in Europe, which offer higher visibility on the ECB's direction and in EM hard currency debt. Here the outlook remains positive, supported by attractive absolute yields, although careful country selection is key.

Recent volatility, driven first by uncertainty around interest rates and more recently by the DeepSeek announcement, has continued to favour a broadening of the rally, particularly in European equities and sectors outside technology. High valuations leave little room for disappointment; however, lower expected taxes for corporates and reduced regulation should benefit US domestic stocks and global companies with significant US operations. All eyes will now be on the earnings season, which could further support the continuation of the recent rotation. Against this backdrop, we continue to see opportunities in Europe, in US large caps-ex mega caps and financials, while remaining more cautious on Emerging Markets for the time being.