The U.S. government’s fiscal outlook can no longer be ignored.

We maintain our bias towards quality UK large-cap stocks trading at a valuation discount to foreign competitors and prefer short-dated Gilts and investment-grade short-duration bonds.

The worst of the tariff volatility seems like it’s blown over. Markets are now focused on the remaining tariffs that are in place and their impact on domestic economic trends and Fed policy.

We continue to be constructive on China and Japan equities, notwithstanding lingering trade risks with the U.S. In fixed income corporates, we prefer higher-quality credits.

The region’s upcoming fiscal stimulus will provide new opportunities for equity investors, though bond markets will keep a close eye on countries’ fiscal sustainability.