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Despite major policy shifts, we believe structural limits on trade and debt, along with transformative forces like AI, support a risk-on stance and an overweight in U.S. equities, as outlined in BlackRock’s 2025 Midyear Outlook.

Trade tensions remain in focus this week as the 90-day tariff pause ends, while markets digest key global events—including the BRICS Summit, ECB meeting, and US data—with sentiment shaped by rising fiscal concerns, mixed labour signals, and geopolitical developments.

Rapid U.S. policy shifts—ranging from tariff decisions to potential tax cuts and regulatory reforms—are boosting investor sentiment and support an overweight in equities, while persistent inflation and deficit worries keep long-term Treasuries underweight.

Markets enter a key week with the ECB Forum and US jobs report in focus, as central banks weigh weak data, tariff risks, and mixed global signals—while easing geopolitical tensions and dovish Fed commentary have boosted risk appetite and raised expectations for rate cuts.

Geopolitical fragmentation is accelerating amid global shocks and shifting security dynamics, driving up defense spending—especially in Europe and Asia—and prompting an active, region-specific investment approach to this evolving mega force.

Markets face a packed week of data and central bank updates—including Fed Chair Powell’s testimony, global PMI releases, and key inflation prints—amid rising geopolitical tensions and mixed economic signals, as central banks adopt cautious stances in the face of persistent inflation and slowing growth.

U.S. inflation volatility, geopolitical tensions, and persistent labor market pressures point to ongoing uncertainty, reinforcing the Fed’s cautious stance while long-term themes like AI continue to support overweight positions in U.S. equities.