Summary points

A higher-nominal world has emerged, driven by persistent fiscal deficits, rising protectionism and competitive currency devaluations that structurally elevate inflation and interest rates.
The IMF raised global growth forecasts to 3.0% in 2025 and 3.1% in 2026 amid easing tariffs.
US growth expectations steadied, as the Philadelphia Fed revised Q3 GDP to 1.3% annualized and full-year to 1.7%, supported by easing inflation and resilient consumption.
Eurozone momentum stayed weak, with Germany’s growth cut to 0.1–0.2% as US tariffs, soft industrial demand and high energy costs constrained activity.
China’s economy showed fragile stabilization amid deflation, weak demand and property drag.
Global equities rallied, led by a strong US rebound, while bonds diverged – treasuries eased on rate-cut bets and European yields climbed on fiscal hopes.
Conclusion: With a severe recession unlikely, the positive bias on risky assets persists, despite increased volatility and potential conflicts under the Trump administration in the coming months. We emphasize capital preservation with opportunistic positioning, viewing rising volatility and dispersion across markets and sectors as catalysts for active management to capture alpha. Credit investments, particularly loans and non-cyclical short-term high-yield bonds offering 7–9% yields, remain preferred. We maintain a constructive stance on equities, where the current market environment favors an absolute return strategy over a traditional relative value approach.

We invite you to review our complete 4th quarter 2025 investment letter, which includes a more detailed look at the regional macroeconomic backdrop, market consensus forecasts, and more.

Quarterly investment letter – 4th quarter 2025

Summary points