Within our allocation we use the following indices, derived from Macrobond, and benchmark weights to calculate performance:

• DM Equities: MSCI World Mid & Large Cap Index, Total Return, USD unhedged, 65%
• EM Equities: MSCI Emerging Mid & Large Cap Index, Total Return, USD unhedged, 10%
• DM bonds: ICE BAML World Sovereign Index, Total Return, USD hedged 10%
• Global IG Corporate Credit: ICE BAML Global Corporate Index, Total Return, USD hedged 5%
• Global HY Corporate Credit: ICE BAML Global High Yield Index, Total Return, USD unhedged 2.5%
• EM LC Bonds: Vaneck JP Morgan EM Local Currency Bond ETF, Total Return, USD unhedged, 2.5%
• EM HC bonds: ICE BAML Emerging Markets External Sovereign Index, Total Return, USD unhedged 2.5%
• DM REITs: FTSE NAREIT Index, Total Return, USD unhedged 2.5%
• Cash: ICE BAML Treasury Bill Index, Total Return, USD unhedged 0%

• 1. High yield to outperform other risk assets – We dial up our risk asset exposure but prefer global high yield credit to equities, while maintaining our underweight to bonds and duration sensitive assets.
• 2. Tech dominance to continue – The US economy is bifurcated with growth increasingly driven by AI-related investment. We think tech will continue to outperform, supported by strong EPS momentum and Fed rate cuts.
• 3. Term premia to remain elevated – The global curve steepening trend will continue to dominate markets in H2 2025 in the context of upside revisions to medium term inflation expectations and still loose fiscal policy.
• 4. Dollar to range trade – We see the broad dollar trading in a range for the rest of 2025 but expect a term premia-led steepening of the yield curve to weaken the dollar over the medium term. A steeper curve makes FX hedging of USD assets more attractive, which is a dollar negative.

• Cross Asset: Fed cuts will sustain the equity bull market – We upgrade developed market (DM) equities to overweight. We believe the resumption of the Federal Reserve's easing cycle will support US equities. Historically, equities outperform bonds following a Fed pause if growth proves resilient. As we believe there's only a limited risk of a recession, we look to increase risk exposure.
• Cross Asset: Stock bond correlation will become positive again in 2026 – We think the recent collapse in the stock-bond correlation (SBC) – from highly positive to negative – is temporary, driven by market pricing of a Fed funds cutting cycle which is too dovish in our view.
• Global Cross Asset Frameworks Chartbook - September 2025 – Our overall cross asset framework is risk-on with our short-term signal in positive territory, suggesting risk assets will outperform defensive assets. This has been driven by our economic growth signal turning positive, as we have revised up our expectations of US economic growth, driven by strong AI-related investment.
• Cross Asset: Our new macro regime indicator suggests buying the dips – Macro regimes are pivotal drivers of cross-asset performance, meaning it's critical to anticipate them correctly. Our new macro regime indicator formalises that intuition to outperform the average annualised return of a 60/40 portfolio by 2.3%, with little additional risk.
• Cross Asset: Gold positioning looks stretched, but we're still bullish – We think gold has remained in favour as US tariffs and trade policy uncertainty pushes the US economy towards a mild stagflationary environment. The asset class has outperformed a 60/40 benchmark portfolio in previous periods of sub-trend growth and rising inflation.

Analysis and information provided to clients by Oxford Economics through its macro strategy services is for research purposes only and does not constitute an offer to sell or buy any security or a recommendation to do so. Research and publications provide information and analysis that Oxford Economics believes to be accurate and are published with the understanding that neither the analyst nor Oxford Economics are providing investment advice; anyone who needs investment advice should consult an investment professional.