The global economic landscape is experiencing notable shifts as outlined in the latest investment takeaways for the third quarter of 2025. The report highlights various macroeconomic trends, including stronger currencies outside the US and a decline in commodity prices, which have tempered inflation concerns despite ongoing trade tensions.
Oil prices have surged due to the conflict between Israel and Iran, but broader market effects are expected to be limited. The focus is shifting towards inflation risks as the temporary relief from the China-US trade war diminishes. Growth forecasts for Europe and Japan have been revised downward.
In equities, there is a strong conviction in US technology stocks driven by the persistent AI trend. Overweight positions are recommended for Europe and Asia ex-Japan (AxJ) due to fiscal stimuli, favorable dividend yields, and valuation discounts.
Credit markets face increased stagflation risks and volatility at longer durations. A strategy prioritizing A/BBB credit ratings with a barbell duration approach is advised, focusing on segments of 2-3 years and 7-10 years. US Treasury Inflation-Protected Securities (TIPS), capital securities, and short-duration quality credit are favored.
Bond vigilantes are attentive as fiscal challenges deepen in both the US and Japan. Investors diversifying away from USD assets may benefit Asian local currency bonds. The trajectory of a weaker USD continues amid declining confidence in USD assets under Trump's controversial policies.
Gold remains an attractive alternative investment due to central bank buying, while hedge funds, private secondaries, credit, and private infrastructure offer additional alpha returns. In commodities, cautious sentiment prevails across sub-sectors except for precious metals.
The thematic focus on humanoids, industrial automation, defense & aerospace highlights their potential benefits amid increasing reshoring and self-reliance globally.
Trump's first 100 days were marked by aggressive cost cuts and tariff wars that repositioned America but left policy ambiguity affecting risk premiums for US financial assets. Recent tax reforms raise debt sustainability concerns with projections indicating significant budget deficits.
The fiscal reality prompts key portfolio adjustments: maintaining neutrality on equities with sectoral performance divergence; downgrading developed market government bonds to neutral due to fiscal concerns; adopting a duration barbell approach in credit; overweighting alternatives like gold with a target price of USD 3,765/oz by Q4 2025; seeking income-generating private assets.
Three main themes dominate Q3 2025: pragmatic de-escalation of tariff tensions, divergent equity performance favoring technology and services sectors over goods-focused ones; fiscal headwinds negatively impacting government bonds and the dollar but benefiting gold investments.
Cross-asset strategies emphasize bonds over equities amidst stagflationary conditions with moderated US manufacturing momentum. Equities maintain conviction on US technology while overweighting Europe due to defense spending increases. Bonds see a duration barbell approach amid rising long-term yields reflecting sticky inflation concerns.
Gold's appeal persists regardless of Trump's policies as it serves as a safe haven against monetary debasement fears or policy shocks driving bond yields lower. Private asset opportunities lie in middle-market buyouts offering value expansion potential without high leverage requirements.
DBS Group continues its leadership role in Asia's financial services sector across multiple markets with accolades recognizing its digital banking innovations and safety standards over consecutive years.