Global Financial Markets

Investors in precious metals and equities are increasingly assuming that central banks will prioritize economic growth over fighting inflation. However, once this path has been taken, it will be difficult to reverse course. This is very positive for gold and equities, but has the enthusiasm gone too far now?

For the US economy and Fed policy, the big question is what will prevail: the deteriorating labor market or a number of positive forces? In any case, we suspect that investors are assuming too many interest rate cuts, which means we can expect considerable volatility in the equity, interest rate, and FX markets in the coming period.

Interest rate paths for the major central banks appear reasonably predictable for the remainder of 2025, but 2026 could hold some significant surprises, with far-reaching consequences for financial markets.