Our multi-asset investment views - April 2025
We have moved to negative on US equities as President Trump’s tariff policies are stagflationary for the US. Read more about our views on a range of asset classes here.
Autheurs
🟢 Long / positive
🟡 Neutral
🔴 Short / negative
🔼 Up from last month
🔽 Down from last month
Main Asset Classes
🟡🔽 Equities
We have downgraded to neutral as aggressive trade policy has worsened the near-term growth and inflation outlook. The shock to markets has so far been self-inflicted and a policy U-turn could see a rapid recovery in markets.
🟡 Government bonds
A violent sell-off following Liberation Day means treasuries appear cheap. However, we remain neutral as we don’t expect government bonds to be an effective hedge against the US trade war given the inflationary impact.
🟡 Commodities
We remain neutral on commodities overall but keep our positive view on gold and negative view on energy. We cut our view to neutral on industrial metals following the escalating trade war between the US and China.
🔴🔽Corporate bonds (credit)
We have downgraded to negative with a particular focus on US credit. US spreads are under-pricing equity market volatility and we expect further widening from current levels.
Equities
🔴🔽US
We have moved to negative as President Trump’s tariff policies are ultimately stagflationary for the US. Efforts to reduce current account and fiscal deficits, alongside a retreat from globalisation, undermine the foundations that have supported US asset outperformance over recent decades.
🟡 UK
We remain neutral on UK equities. While the UK is well positioned to evade the most stringent tariffs, we are mindful of limited fiscal headroom in a slowing growth environment.
🟢 Europe ex UK
We remain positive on Europe where expansive fiscal policy is likely to help close the gap between US and European economic growth. As investors flee volatile US markets, European shares, with their better valuations, remain the preferred destination.
🟡 Japan
Rising inflation expectations, real wage increases, and loose financial conditions provide an accommodative backdrop for Japanese equities. However, we remain neutral given Japan’s export-orientated economy and increased demand for the yen.
🟡🔽 Global Emerging Markets (EM)1
Following a 90-day reprieve on reciprocal tariffs for the rest of the world, we have downgraded our view on emerging markets given the escalating tariff spat between the US and China.
🟡🔽Asia ex-Japan: China
We have downgraded our view to neutral as China is now the prime target of President Trump’s trade war.
🟡 EM Asia ex China
Whilst Asian markets were granted a temporary reprieve from reciprocal tariffs, they are indirectly impacted by reliance on imports from China. This adds further downside risks to exporters such as South Korea and Taiwan amidst an already fragile manufacturing cycle.
1Global Emerging Markets includes Central and Eastern Europe, Latin America, and Asia.
Government bonds
🟡 US
Following the recent sell-off, we view US government bonds as attractive on a valuation basis. However, concerns around fiscal credibility and the uncertain impact of upending the global trade order on US treasury demand and inflation keeps us neutral.
🟡 UK
UK gilt yields are trading at attractive valuations and thus far the government has honoured its limited fiscal headroom. However, threats to growth from the global trade war may lead to higher spending and gilt yields (the interest paid to an investor) remain sensitive to treasury yields.
🟡 Europe
We remain neutral. Although German bond yields found favour during the recent treasury sell-off, yields remain underpinned by a structural shift towards fiscal expansion.
🟡 Japan
We remain neutral as although US tariffs have reduced the prospect of a May rate hike, the ultimate path of interest rates is likely higher.
🟡 US inflation-linked bonds
Medium term inflation-linked securities are trading at attractive valuations as the market has shifted its concerns from inflation to growth.
🟢 Emerging markets local currency bonds
We maintain a positive view on emerging market debt as all-in yields are attractive and we expect further depreciation of the US dollar.
Investment grade credit
🔴 US
We maintain our negative stance. Valuations are still at extreme levels despite the recent sell-off and US credit has lagged other asset classes in pricing in increased recession risk.
🟡 Europe
We remain neutral on European IG, where valuations are less extreme relative to the US, but recent outperformance has narrowed the valuation premium.
🟡 Emerging markets USD
Although we remain neutral we are carefully monitoring the asset class, which is highly concentrated in Asia and thus vulnerable to tariffs.
High yield bonds (non-investment grade)
🔴🔽US
We have downgraded to negative as high yield spreads (the difference in yield between two bonds or classes of bonds) are under-pricing equity market volatility. The asset class also has high exposure to consumer-related sectors, which have been among the hardest hit by the tariff fallout.
🟡Europe
We remain neutral but are monitoring the asset class closely given high exposure to the automotive industry. There is evidence of widening spreads in auto parts and equipment in response to tariffs.
Commodities
🔴Energy
We remain negative on energy where threats to global growth undermine demand for a commodity with ample supply. Projections indicate substantial inventory builds this year, with OPEC+ increasing supply with a bumper hike expected in May.
🟢 Gold
We remain positive on gold, which is our preferred diversifier against elevated geopolitical risk.
🟡🔽Industrial metals
We have downgraded to neutral as the escalating global trade war undermines a recovery in the global manufacturing cycle.
🟡 Agriculture
We remain neutral on agriculture. Market fundamentals are finely balanced but the ratcheting up of retaliatory tariffs could weigh down on prices.
Currencies
🔴🔽 US $
We have downgraded the US dollar to negative as the currency’s safe-haven status has been called into question. The market is actively selling US assets in response to the tariff fallout, as opposed to the traditional hoarding of dollars.
🟡 UK £
We remain neutral. The Bank of England is walking a fine line; holding rates risks triggering a recession, whilst premature cuts risk reigniting sticky services inflation.
🟢EU €
We remain positive on the euro, which is poised to benefit from cross-border flows away from the US and a shift towards expansionary fiscal policy within the eurozone.
🔴 CNH ¥
For now, we maintain our negative stance. CNH is vulnerable to any further escalation in US-China trade tensions.
🟢 🔼JPY ¥
We have upgraded to positive on the Japanese yen, which has already started to benefit from safe-haven flows following the fall in sentiment globally.
🟡🔼Swiss franc ₣
We have upgraded the Swiss franc to neutral. The currency has become an effective diversifier given the US dollar’s declining status as a safe-haven asset.
Source: Schroders, April 2025. The views for equities, government bonds and commodities are based on return relative to cash in local currency. The views for corporate bonds and high yield are based on credit spreads (i.e., duration-hedged). The views for currencies are relative to the US dollar, apart from the US dollar which is relative to a trade-weighted basket.
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