Our multi-asset investment views – November 2025

While the recent US government shutdown has clouded some of the economic data, we continue to see a low probability of a US recession. The labour market remains steady, with both hiring and firing activity subdued, and real disposable income continues to support consumer spending. Although risks are present, particularly around the possibility of an “AI bust” scenario, we believe it is too early to take a defensive stance. We are monitoring closely the increasing use of debt and circular financing to fund AI-related investment, as these trends could create longer-term structural vulnerabilities.

Market expectations for interest rate cuts in 2026 may prove optimistic, but an extended period of Federal Reserve easing, assuming no recession, should remain supportive for equities. As such, we maintain our positive view on equities, with a preference for the US, where corporate earnings are likely to be supported by significant fiscal stimulus in 2026, and for China, where valuations and sentiment remain relatively attractive. We’re less positive on US Treasuries, given ambitious market expectations at the short end and crowded investor positioning at the long end of the curve. This stance helps to diversify our broader pro-risk positioning, alongside equities and gold, both of which remain sensitive to liquidity conditions.

Despite recent market volatility, our constructive view on gold is unchanged. We continue to see it as a valuable portfolio diversifier in an environment marked by policy uncertainty, fiscal pressures, and growing investor doubts about the long-term role of US Treasuries and the dollar.

In summary, while cyclical risks remain relatively contained, structural vulnerabilities—particularly those linked to AI-related leverage and concentration—are beginning to build. For now, we balance our positive view on equities with exposure to gold and a more cautious stance on duration and the US dollar.

🟢 Long / positive

🟡 Neutral

🔴 Short / negative

🔼 Up from last month

🔽 Down from last month

Main Asset Classes

🟢 Equities

We maintain our positive view on equities, supported by solid earnings, Fed easing and progress around trade agreements. However, we continue to monitor risks around concentration and high valuations.

🔴 Government bonds

We remain negative on government bonds. Our fair-value model suggests bonds are now expensive. In the US, consumer spending remains robust and worries around labour market deterioration appear overdone in our view.

🟡 Commodities

We remain neutral on commodities overall but retain sector specific views. We remain positive on gold and industrial metals but have turned negative on energy as we expect supplies to exceed demand forecasts.

🔴🔽Corporate bonds (credit)

We have downgraded credit this month. Credit pricing leaves limited cushion against deteriorating fundamentals.

Equities

🟢 US

We maintain a positive outlook on US equities. While signs of frothiness are emerging, we view this as late-cycle behaviour rather than an indication of an impending recession, as corporate fundamentals and earnings remain solid.

🟡 UK

A weakening fiscal position and unattractive macroeconomic fundamentals lead us to maintain a neutral stance.

🟡Europe ex UK

Although there are attractive opportunities, particularly in European mid-caps, large-caps face sluggish profit growth and more limited scope for positive surprises.

🟡Japan

We remain neutral. While the recent rally has been supported by diminished trade tariff uncertainty and corporate reforms, fundamentals remain less compelling and short term fluctuations in the Yen may cause disappointing performance.

🟢 Global Emerging Markets (EM)1

We remain positive on Emerging Market equities, with valuations looking relatively cheap and continued enthusiasm around the AI theme. However, tariff uncertainty remains a risk.

🟢 Asia ex-Japan: China

Valuations, sentiment, and positioning appear far less stretched in China than in other regions, which leads us to maintain our positive view.

🟢 EM Asia ex China

We maintain our positive view. Cheaper valuations, along with strong growth and easier financial conditions are all supportive for EM Asia equities.

1Global Emerging Markets includes Central and Eastern Europe, Latin America, and Asia.

Government bonds

🔴US

We maintain a negative view on US Treasuries, given ambitious market expectations for interest rate cuts and crowded long positioning at the longer end of the curve.

🟢🔼UK

We have upgraded our view on gilts to positive. Uncertainty around the budget has created volatility recently but weaker employment data, inflation appearing to have peaked and the prospect of more rate cuts mean we feel there is upside potential.

🔴🔽Europe

We have downgraded our view on German Bunds to negative. With more fiscal spending scheduled for 2026, expensive valuations and the ECB indicating that they do not expect to cut interest rates again, we believe there is scope for yields to rise.  

🟡 Japan

We remain neutral. The yield curve has steepened sharply as concerns grow around larger than expected fiscal stimulus, along with delays in rate hikes from the BOJ.

🟡 US inflation-linked bonds

Though we anticipate upside risks to inflation next year due to potential rate cuts and trade tariff impacts, we remain on the sidelines for now. 

🟡 Emerging markets local currency bonds

We remain neutral. Fundamentals vary widely globally, making broad exposure less compelling.

Investment grade credit

🟡🔼US

Valuations remain very expensive and break-even spread levels are tight. However, the recent moderate uptick in spreads and solid corporate fundamentals justify a neutral score.

🟡 Europe

We maintain our neutral view. We continue to prefer Europe over the US, for its overall credit quality, however, valuations are still expensive.

🟡 Emerging markets USD

We remain neutral. Recent improvements the macro-economic environment and marginal increase in demand are offset by unattractive valuations.

High yield bonds (non-investment grade)

🟡🔼US

We have upgraded our view for US High Yield to neutral. However we would consider this to be a short-term, tactical shift based on the recent reset in spreads. In the longer term we do see some risks building.

🟢🔼Europe

We remain positive on European High Yield, where hedged yields are most attractive and the risks emanating from re-leveraging are most muted.

Commodities

🔴🔽Energy

We downgrade our view on energy to negative, as the OPEC decision to increase production in the summer has added to the global surplus, whereas demand is set to stay relatively flat in the near term.

🟢 Gold

We maintain our positive view on gold. Despite recent volatility, we continue to see it as our preferred diversifier in an environment of growing investor doubts around Treasuries and the US dollar.

🟢 Industrial metals

We maintain our positive view on industrial metals. Prices continue to grind higher, underpinned by supply tightness and supportive Chinese policy signals.  

🟡 Agriculture

Despite a slight uptick at the beginning of October, when China agreed to buy more soybeans from the US, we don’t see this as the start of a new trend. Supply side remains strong, maintaining downward pressure on prices overall.

Currencies

🔴US $

Our view on the US dollar remains negative, as institutional demand continues to erode as investors rotate out of the dollar.

🟡 UK £

The pound has already moved sharply on the recent weaker inflation print and an expectation of a rate cut in December. Uncertainty also remains around the budget later this month. We remain neutral for now. 

🟢EU €

We maintain a positive view on the euro. The rate cycle is likely to be over, with the ECB holding rates at 2% in October for the third successive meeting. Inflation is also on target, however upside risks to inflation from bottlenecks remain.

🟡 CNH ¥

We maintain our neutral view on the renminbi, believing the currency will stabilise around its current level.

🟡 JPY ¥

We remain neutral. A larger than anticipated fiscal stimulus package has the potential to put downward pressure on the Yen, however markets have moved quickly to discount the policy shift.

🟡Swiss franc ₣

We remain neutral on the Swiss Franc. Although it could be useful as a hedge in a recession, its low carry and the low risk of recession keep us neutral.

Source: Schroders, November 2025. The views for equities, government bonds and commodities are based on return relative to cash in local currency. The views for corporate bonds and high yield are based on credit spreads (i.e., duration-hedged). The views for currencies are relative to the US dollar, apart from the US dollar which is relative to a trade-weighted basket.

Marketing material

Please remember that the value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested.

Issued by Schroder Unit Trusts Limited, 1 London Wall Place, London EC2Y 5AU. Registered Number 4191730 England.

For illustrative purposes only and does not constitute a recommendation to invest in the above-mentioned security / sector / country.

Schroder Unit Trusts Limited is an authorised corporate director, authorised unit trust manager and an ISA plan manager, and is authorised and regulated by the Financial Conduct Authority.