Investment Monthly: Fed easing creates opportunities across markets

Key takeaways

The re-start of the Fed’s rate cut cycle boosts equities, bonds and gold to new highs. Historically, equities and bonds tend to perform well in the 12 months after the Fed resumes easing. We now expect two more 0.25% rate cuts this year. As the 10-year US Treasury yield is now below our year-end forecast of 4.3%, we reduce our maturity preference for US Treasuries to 5-7 years.

We see further upside for US equities due to multiple drivers in place, with rate cuts being one of those. The AI liftoff drives huge activity and investment in the AI ecosystem. Together with a healthy pick-up in M&A activity, steady increases in share buybacks and dividends, as well as a constructive cyclical outlook and structural drivers such as nearshoring and the US re-industrialisation, we stay bullish on US equities, preferring IT, Communications, Industrials and Financials.

Apart from a positive outlook for the US market, diversification across geographies, sectors, asset classes and FX can help capture additional opportunities and manage risks. Geographically, we also like China and Singapore for their different economic cycles and growth drivers compared to those of the US. We overweight Financials and Industrials in most regions for their cheaper valuations than IT and attractive opportunities. Quality bonds, gold and alternative assets are good diversifiers amid slowing growth. A multi-asset strategy is an effective way to achieve all of the above.

https://www.hsbc.com.my/wealth/insights/asset-class-views/investment-monthly/fed-easing-creates-opportunities-across-markets/

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Publish Date: Tue, 30 Sep 2025, 21:04 PM

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