AI-Led Equity Growth Meets Global Yield and Gold Shifts

​Capitalize on AI-led earnings momentum and global rate divergence to recalibrate your portfolio across equities, bonds, FX, and commodities. Navigate rising U.S. yields and trade uncertainty by shifting into gold, resilient credit, and high-growth opportunities in Asia and EMEA.

Strong Corporate Earnings and Regional Valuations Fuel Optimism for Global Equities

Nvidia and EM Earnings Drive Global Equity Upside

Nvidia reported a 73% year-on-year increase in data center revenue, with 1Q25 revenue reaching USD 44.1bn and adjusted EPS of USD 0.96, beating estimates.
 
Despite a USD 8bn reduction from its 2Q revenue guidance due to the China export ban, Nvidia expects revenue to grow to USD 45bn.
 
Asia ex-Japan and EMEA equities are projected to deliver strong EPS growth in 2025 and 2026—12.4% and 12.1% for AxJ, and 13.6% and 12.4% for EMEA, respectively—with forward P/E ratios of 13.7 and 11.1.
 
EM equities also show robust performance with 2025 EPS growth of 12.8%, a forward P/E of 12.9, and ROE of 13.1%.
 
The US consumer confidence index rose from 85.7 in April to 98 in May, but policy volatility around tariffs and taxation continues to pose risks.
 
Foreign Taxation and Tariff Risks Weigh on Equity Sentiment

Section 899 of Trump’s budget bill introduces a dividend and income tax on foreign holders of US assets, starting at 5% and rising to 20% over four years, which discourages foreign investment in US equities and bonds.
 
Although broad tariffs were blocked by a US court, sector-specific risks persist through legal alternatives such as Sections 232 and 301, affecting exporters in China, Mexico, and ASEAN.
 
April’s core PCE eased to 2.5% year-on-year, while monthly spending slowed to 0.2% and the savings rate rose to 4.9%, reflecting consumer caution.
 
Japan’s 30Y JGB yields have reached levels not seen since 2000, raising concerns about a reallocation of Japanese investments away from US Treasuries.
 
In Hong Kong, the HKD peg system remains intact, but interest rate volatility is expected to increase due to HKMA interventions and policy-driven capital flows.
 
Regional Themes Support Selective Equity Exposure

Nvidia’s data center revenue grew 73% year-on-year in 1Q25, with revenue projected to reach USD 45bn in 2Q, supporting continued investment in US technology stocks with AI exposure.
 
European defense equities are supported by fiscal stimuli and tariff de-escalation, with the region trading at a forward P/E of 15.5 despite a 2025 EPS growth of -0.6%.
 
Asia ex-Japan equities, including REITs and infrastructure plays, are supported by strong 2025 EPS growth of 12.4% and a forward P/E of 13.7.
 
India offers high-growth exposure with a forward P/E of 23.8, 2025 EPS growth of 9.9%, and ROE of 14.5%.
 
EMEA equities combine a low forward P/E of 11.1, P/S of 1.9, and high ROE of 15.2%, making them attractive for diversified exposure across industrials, consumer goods, and tech exporters.
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Rate Volatility and Fiscal Uncertainty Drive Defensive Positioning in Global Credit Markets

Rate Normalization and Volatility Shape Bond Market Yields

The rise in long-end JGB yields, nearing levels last seen in 2000, reflects persistent domestic inflation and weak demand, raising concerns about a potential unwinding of the yen carry trade.
 
The US Treasury yield curve remains flat, with both 2Y and 10Y UST yields forecast at 4.20% in 2Q25, and 10Y yields projected to rise to 4.80% by 4Q26, indicating delayed normalization.
 
JPY-hedged yields for 30Y USTs are significantly lower than yields on USD IG credit over 25 years, making the latter more attractive to Japanese investors.
 
HKD interest rate volatility is rising due to HKMA interventions that limit appreciation while injecting liquidity as the USD-HKD spot nears the peg ceiling.
 
IG corporate bonds, TIPS, and MBS are gaining popularity as they offer spread cushions, inflation protection, and benefits from wider spreads, reinforcing the shift toward duration barbell strategies.
 
Fiscal and Inflation Pressures Undermine Credit Outlook

April’s core PCE eased to 2.5% year-on-year, but inflation may rise in the near term due to sticky services inflation and one-off income boosts, maintaining elevated rate volatility in the US and Japan.
 
The House version of Trump’s tax bill is expected to add approximately USD 3.8 trillion to public debt over 10 years, raising US sovereign credit risk and pressuring private credit markets.
 
Japanese investors, key holders of US Treasuries, may repatriate funds, pushing US Treasury yields higher and creating supply-side pressure.
 
Sectoral credit risk is elevated due to potential reimposition of tariffs under Sections 232 and 301, affecting industries such as autos, steel, and electronics.
 
High yield spreads in Asia (10.1%) and Latin America (9.9%) reflect ongoing credit risks in emerging markets, with short average maturities of 3.7–3.9 years indicating elevated default and macroeconomic risk.
 
Defensive Bond Strategies Favored Amid Spread and Duration Gaps

US investment grade (IG) corporate bonds yield 5.2%, with A3/Baa1 ratings and average maturities of 10.4 years, offering spread cushions against rate volatility.
 
A barbell strategy focused on 2–3Y and 7–10Y IG credit is favored for better risk-adjusted returns.
 
TIPS and mortgage-backed securities (MBS) are recommended for their inflation protection and benefit from wider spreads.
 
Asia IG bonds yield 4.9%, carry A2/A3 ratings, and have an average duration of 7.2 years, providing attractive income with relatively low default risk.
 
Gold is also cited as a hedge against geopolitical and inflationary risks, offering diversification outside the bond market.
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Currency Markets React to Diverging Global Rate Paths and Trade Uncertainty

USD Resilience and SGD Sensitivity to Regional Volatility

The USD remains strong due to high yields and safe-haven demand amid US trade policy uncertainty, which also drives SGD underperformance.
 
April’s US core PCE of 2.5% contrasts with Singapore’s 1.7% retail sales, limiting MAS’s policy tightening options and capping SGD strength.
 
Volatility in HKD and JPY rates continues to influence SGD through capital flows, and the ECB’s expected 3.25% deposit rate supports EUR appreciation against SGD.
 
FX Projections Reflect Diverging Central Bank Paths

The EUR is forecast to rise to 1.20 by 4Q26, supported by ECB rate hikes.
 
USD offers short-term yield advantages, with 10Y UST yields projected to reach 4.80%, while the JPY is expected to appreciate from 150 to 130 per USD.
 
Gold-linked currencies such as AUD are seen as inflation hedges, while currencies from tariff-prone regions like China and Mexico face downside risks.
 

​Gold Emerges as a Core Safe-Haven Asset Amid Inflation, Policy Neutrality, and Trade Risks

Gold Maintains Hedge Appeal as SGD Portfolio Anchor

Gold is identified as a hedge against geopolitical and inflationary risks, making it appealing in SGD terms amid trade-linked volatility and MAS’s neutral policy stance.
 
It is included in the CIO’s barbell strategy alongside private assets and hedge funds, signaling low volatility and high liquidity.
 
With the USD projected to remain above SGD through 2025–2026, gold may become more expensive in SGD terms, but safe-haven demand supports its price resilience.
 
Gold remains highly liquid across trading venues and ETFs, making it more accessible than real estate or private assets for SGD-based investors.
 
Continued demand from Asia, particularly India and China, provides a structural floor that supports SGD-denominated gold valuations.
 
Inflation and Trade Volatility Reinforce Gold’s Role

April’s core PCE eased to 2.5% year-on-year, but inflation may rise in the near term, keeping demand for inflation hedges like gold elevated in SGD portfolios.
 
Uncertainty surrounding US trade policy, including potential escalation under Sections 232 and 301, increases global demand for gold as a safe-haven asset.
 
While 30Y UST yields are projected to rise to 4.80% by 4Q26, gold retains value through uncertainty and is less affected by rising yields, enhancing its appeal in SGD terms.
 
HKD interventions contribute to regional rate volatility, indirectly impacting SGD liquidity preferences and reinforcing gold’s role as an uncorrelated reserve asset.
 
With the Monetary Authority of Singapore maintaining a stable policy stance, gold provides external hedge value for SGD-denominated portfolios.
 
Preferred Gold Instruments and Supporting Commodity Picks
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Gold is recommended as a core hedge in multi-asset portfolios due to its role in mitigating geopolitical and inflationary risks.
 
Investors holding SGD are advised to overweight gold during periods of trade volatility, USD strength, or political uncertainty.
 
Gold ETFs such as SPDR Gold Shares or iShares Gold Trust, which offer both USD and SGD share classes, provide liquid exposure without the need for physical storage.
 
Gold miners in stable jurisdictions like Canada and Australia are preferred for combining commodity-linked income with currency diversification.
 
Industrial metals such as copper and aluminum are also favored, particularly given the overweight allocation to the Asia ex-Japan materials sector, while commodities from tariff-sensitive regions like China and Mexico are less attractive due to price volatility risks.