Hoshang Daroga

After a strong run for global risk assets, we believe selectivity is increasingly important, particularly within US equities where valuations, especially across parts of the technology complex, appear stretched. While the long-term case for AI remains compelling, with adoption likely to support productivity gains across a broad range of sectors, we see growing opportunities outside the most crowded areas of the market. Inflation dynamics are becoming more constructive, with disinflation continuing and price pressures expected to move closer to central bank targets over time. In the UK, persistent economic weakness increases the likelihood that the Bank of England may be forced to cut rates more aggressively than currently priced, a combination that could weaken Pound Sterling and push bond yields lower, providing the Chancellor with much needed fiscal breathing room ahead of the next budget. Against a backdrop of elevated geopolitical risk, we continue to see a role for alternatives within diversified portfolios. Investor positioning remains optimistic, leaving markets vulnerable to short-term drawdowns should negative surprises emerge, yet underlying fundamentals continue to support the case for long-term returns.

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