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Investment Monthly: Fed easing creates opportunities across markets

1 October 2025

Willem Sels

Global Chief Investment Officer, HSBC Private Bank and Premier Wealth

Lucia Ku

Global Head of Wealth Insights, HSBC International Wealth and Premier Banking 

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.

Talking Points

Each month, we discuss 3 key issues facing investors

Asset Class Views

Our latest house view on various asset classes

Sector Views

Global and regional sector views based on a 6-month horizon

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