Dylan Smith

Global equity markets enter Q3 with cautious optimism after a strong rebound in Q2, supported by trade agreements between the US, China, and the UK. Markets anticipate further deals ahead, helping to ease some geopolitical tensions. However, global bond markets, especially US government debt, remain under pressure amid persistent concerns over the rising US deficit and political pressure on the Federal Reserve to lower interest rates.

In contrast, South African markets continue to outperform, with local bonds gaining for a fifth consecutive month, driven by political stability following Budget 3.0 and a supportive 25 basis point rate cut by the MPC. Looking ahead, equities could benefit from further easing of geopolitical risks, while bond markets may remain volatile without fiscal improvements.

We maintain our long-term strategic asset allocations, with a general preference for SA bonds over global bonds and a constructive view on long-term global equity exposure.

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