In October, the most notable development was a sharp rise in bond yields, reversing much of the decline seen in Q3. This resulted in a challenging month for bonds, which weighed on valuations across most asset classes—though gold was a notable exception. Much of this shift was attributed to what was widely termed “the Trump trade,” driven by growing market expectations that Donald Trump would become the next US president. This anticipated outcome led to higher bond yields, a steeper yield curve, rising inflation expectations, fewer projected interest rate cuts, selective gains in equities, and a stronger US dollar.

Looking ahead, several risks are evident: potential policy missteps, the possibility of a slowdown in global economic growth, high government debt levels limiting fiscal flexibility, and escalating geopolitical tensions. However, the ongoing policy easing cycle still has room to run, offering a solid foundation for equities. Additionally, the significant bond market sell-off in recent weeks has improved valuations in fixed income. While a period of consolidation may follow the initial market enthusiasm surrounding Trump’s victory, we remain cautiously optimistic. We plan to use any market weakness as an opportunity to increase our exposure to risk assets in our portfolios.