The setback in equities, particularly in technology stocks, indicated market fragility as the Japanese yen carry trade ended, coupled with weak US labor and inflation figures.
Despite the market turbulence from July's hiccup, our turbulence index remains low, suggesting a sustained market calm could lead to a positive outlook for risk assets.
The key focus for financial markets will be the Fed's rate cut cycle and the US election, which may influence market trajectories in the medium term.
While a recession in 2025 isn't our base case, the probability remains at 25%, primarily due to the unknown lag effects of higher interest rates.
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