September 30, 2025 06:28 PM GMT Cross-Asset Brief M Global Idea Is the Rally in Chinese Equities Sustainable? Key Debates In Under 5 Minutes – September 2025 Don't have a lot of time? Here are some brief thoughts on a few key cross-asset debates we've had with investors in September on our out-of-consensus calls. 1) Can the USD weaken from here? Yes 2) Could potential fiscal expansion weigh on Japanese bonds? Not likely 3) Is the US consumer starting to show weakness? Consumer spending is slowing and increa ...

Summary of Key Points from the Conference Call Industry Overview - The report provides insights into various asset classes including equities, fixed income, currencies, and commodities, with a focus on market sentiment and positioning as of September 19, 2025. Core Insights and Arguments 1. **Equity Market Forecasts**: - S&P 500 is forecasted to return -25.3% in a bear case, with a base case return of -1.3% and a bull case return of 9.2% [3] - MSCI Europe shows a bear case return of -24.3%, base case of 4.5%, and bull case of 21.2% [3] - Topix is projected to return -31.1% in a bear case, -5.7% in a base case, and 5.4% in a bull case [3] - MSCI Emerging Markets (EM) is expected to return -32.7% in a bear case, -8.1% in a base case, and 3.8% in a bull case [3] 2. **Currency Performance**: - JPY is expected to appreciate by 18.3% in a bear case, with a base case of 10.9% and a bull case of 0.5% [3] - EUR is forecasted to return -4.7% in a bear case, with a base case of 4.7% and a bull case of 9.0% [3] - GBP shows minimal change with a bear case of 0.4% and a bull case of 12.3% [3] 3. **Bond Market Insights**: - UST 10-year bonds are expected to yield 5.7% in a bear case, 10.2% in a base case, and 15.3% in a bull case [3] - UKT 10-year bonds forecast a bear case return of 8.0%, base case of 10.0%, and bull case of 17.4% [3] 4. **Commodity Market Trends**: - Brent crude oil is projected to return -23.1% in a bear case, with a base case of -7.8% and a bull case of 84.4% [3] - Gold is expected to return -21.4% in a bear case, -7.5% in a base case, and 10.9% in a bull case [3] 5. **Market Sentiment and Positioning**: - The Market Sentiment Indicator (MSI) aggregates survey positioning, volatility, and momentum data to quantify market stress and sentiment [62] - Current sentiment shows a negative bias, indicating potential market stress [62] 6. **ETF Flows**: - US equities experienced a significant outflow of $19.8 billion over the past week, indicating a bearish sentiment [44] - In contrast, bonds saw inflows of $15.9 billion, suggesting a flight to safety among investors [44] Additional Important Insights - The Nikkei 225 index surpassed the 45,000 mark for the first time, indicating strong performance in the Japanese equity market [10][14] - The DXY index fell to its lowest level since March 2022, reflecting a weakening US dollar [10][19] - Bond volatility has dropped to a near four-year low, suggesting reduced uncertainty in the bond markets [10][13] This summary encapsulates the key points from the conference call, highlighting the current state and forecasts of various asset classes, market sentiment, and significant market movements.

Summary of Key Points from the Conference Call Industry Overview - The report provides insights into various asset classes including equities, fixed income, foreign exchange (FX), and commodities, with a focus on market sentiment and positioning as of August 29, 2025. Key Highlights Equities - **S&P 500**: Closed at 6,460, with a forecast range for Q2 2026 between 4,900 (bear) and 7,200 (bull), indicating a potential return of -22.9% in a bear case and 12.7% in a bull case [3][7]. - **MSCI Europe**: Closed at 2,198, with a forecast range of 1,610 (bear) to 2,620 (bull), showing a bear case return of -23.6% and a bull case return of 22.4% [3]. - **Topix**: Closed at 3,075, with a forecast range of 2,100 (bear) to 3,250 (bull), indicating a bear case return of -29.5% [3]. - **MSCI Emerging Markets (EM)**: Closed at 1,258, with a forecast range of 870 (bear) to 1,360 (bull), showing a bear case return of -28.4% [3]. Foreign Exchange (FX) - **Japanese Yen (JPY)**: Forecasted to weaken to 147 against the USD, with a bear case return of 17.3% [3]. - **Euro (EUR)**: Expected to trade at 1.17 against the USD, with a bear case return of -4.4% [3]. - **Indian Rupee (INR)**: Reached an all-time low of 88.2 against the USD, with a forecast of 12.5% return in a bear case [11][12]. Fixed Income - **UST 10-Year**: Yield at 4.23%, with a forecast range of 3.45% (bull) to 4.00% (base) [3]. - **US Investment Grade (IG) Bonds**: Yield spread at 79 bps, with a bear case return of -2.7% [3]. Commodities - **Brent Crude Oil**: Closed at $68, with a forecast range of $50 (bear) to $120 (bull), indicating a bear case return of -24.2% [3]. - **Gold**: Closed at $3,429, with a forecast range of $2,975 (bear) to $4,200 (bull), showing a bear case return of -17.2% [3]. Market Sentiment and Positioning - The **Market Sentiment Indicator (MSI)** aggregates survey positioning, volatility, and momentum data to quantify market stress and sentiment, indicating a mixed sentiment across various asset classes [53][58]. - **Equity Positioning**: US equities show a net positioning of 28% among asset managers, while EM equities show a higher net positioning of 42% [66]. - **Bond Positioning**: UST 10-Year shows a net positioning of 38% among asset managers [66]. Additional Insights - The report highlights the importance of monitoring fund flows across approximately 5,000 ETFs globally, covering around $7 trillion in assets, to gauge demand across assets and regions [22]. - The **COVA (Correlation-Valuation) scorecard** identifies good portfolio diversifiers at reasonable prices, rewarding assets with negative correlation to equities and attractive valuations [85]. Conclusion - The current market environment reflects significant volatility and mixed sentiment across various asset classes, with potential risks and opportunities identified in equities, fixed income, FX, and commodities. Investors are advised to consider these factors in their investment decisions.

Summary of Key Points from the Conference Call Industry or Company Involved - The conference call primarily discusses the global financial markets, focusing on various asset classes including equities, fixed income, currencies, and commodities. Core Insights and Arguments 1. **Market Performance and Forecasts**: - The S&P 500 reached an all-time high of 6,297, with forecasts for Q2 2026 suggesting a range of potential returns: Bear case at 4,900, Base case at 6,500, and Bull case at 7,200, indicating a potential decline of -21.0% in the Bear case [2][6][8]. - The MSCI Europe index also reached a high of 2,183, with similar forecasts indicating a Bear case of 1,610 and a Bull case of 2,620, reflecting a potential decline of -23.1% [2][6]. 2. **Equity and Fixed Income Correlations**: - The correlation between the S&P 500 and the US dollar (DXY) remains negative, suggesting that as the dollar strengthens, equity markets may not follow suit [6][9]. 3. **Interest Rate Expectations**: - Markets are now pricing in fewer cuts in interest rates for 2025 compared to previous months, indicating a shift in monetary policy expectations [6][15]. 4. **ETF Flows and Market Sentiment**: - The report tracks daily fund flows across approximately 5,000 ETFs globally, covering around $7 trillion in assets, providing insights into cross-asset sentiment and positioning [20][21]. - Recent data shows a significant inflow into bonds, with $12.4 billion in the last week, indicating a shift in investor preference towards fixed income [39]. 5. **Commodities Performance**: - Brent crude oil prices are forecasted to have a Bear case of $50 and a Bull case of $120, reflecting a potential decline of -25.0% in the Bear case [2]. - Gold is projected to have a Bear case of $2,975 and a Bull case of $4,200, with a potential decline of -14.4% in the Bear case [2]. Other Important but Possibly Overlooked Content 1. **Market Sentiment Indicator (MSI)**: - The MSI aggregates survey positioning, volatility, and momentum data to quantify market stress and sentiment, indicating a mixed sentiment landscape [57][62]. 2. **Cross-Asset Positioning**: - The report highlights net positioning across various asset classes, with US equities showing a net long position of 29% among asset managers, while emerging market equities show a higher net long position of 43% [65]. 3. **COVA Framework**: - The Cross-Asset Correlation-Valuation Framework (COVA) identifies good portfolio diversifiers at reasonable prices, rewarding assets with negative correlations to equities and attractive valuations [78][80]. 4. **Extreme Market Moves**: - The report notes significant weekly moves in various asset classes, with US Momentum showing a weekly move of 925 basis points, indicating high volatility and potential trading opportunities [89]. 5. **Global Correlation Index**: - The current global correlation index stands at 43%, reflecting a slight increase, indicating a more interconnected market environment [71]. This summary encapsulates the key insights and data points from the conference call, providing a comprehensive overview of the current market landscape and future expectations.