Investment Monthly: A new Fed Chair and a stronger USD in focus

Key takeaways

We believe market concerns regarding mega IPOs and stretched valuations will be offset by solid earnings growth across most S&P 500 companies, supported by AI-led innovation. The more hawkish tone from the new Fed Chair reinforces our view that policy rates will remain steady through 2026 and 2027. We remain overweight on US equities and have become more bullish on the USD.

In the UK, while May’s inflation figures remained above target and economic growth indicators were mixed, we view inflation risks as more balanced following the interim peace agreement. We now expect no rate hikes in 2026. Meanwhile, political uncertainty persists after Starmer’s resignation. We maintain our neutral stance on UK gilts and UK equities while overweighting 5-7-year GBP investment grade credit.

Gold did not rally during the Middle East conflict and has largely moved in tandem with equities. Our analysis indicates that US yields are the primary driver of gold prices. We believe gold may remain range-bound in the near term amid elevated real yields and a stronger USD. However, demand for portfolio diversification, central bank buying and steady ETF inflows should support gold prices over the medium term. We continue to view gold as an effective diversifier against broader portfolio risks.

https://www.hsbc.com.my/wealth/insights/asset-class-views/investment-monthly/a-new-fed-chair-and-a-stronger-usd-in-focus/

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Publish Date: Wed, 01 Jul 2026, 07:03 AM

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