Outlook
& news.

•    Donald Trump's recent decisions have rekindled uncertainty, particularly with the increase in H-1B work visa fees to $100,000 and the announcement of a new set of tariffs.
•    Despite the economic slowdown and tame inflation, central banks in China and Switzerland chose to leave rates unchanged. 
•    Market expectations of Fed rate cuts have faded, and US and European government bonds have risen significantly.

• The Fed resumed cutting rates with a 25bp reduction. However, investors focused on the FOMC’s projections.
• This situation is good news for risk appetite and equity indices made further gains.
• Elsewhere, China released disappointing data on retails sales, industrial production and investment but the country's equity markets brushed them off.

With a 0.25% cut in its key interest rates, the US Federal Reserve (Fed) has given financial markets what they have been waiting for the past few months.

On Friday, September 12, Fitch downgraded France's sovereign rating from AA- to A+. The agency justified this decision on the grounds of a persistent deficit, public debt already at 114% of GDP and likely to reach 132% in 2034, and chronic political instability. At this level, France is approaching Italy's ratios, which are expected to reach 135%, while diverging from economies such as Spain and Belgium, whose trajectories appear more stable. This downgrade does not place France in a situation of immediate crisis, but it confirms the perception of relative weakness.

•    Disappointing job creations in the US convinced markets that the Fed had to revive the rate-cutting cycle.
•    The ECB, meanwhile, left its rates unchanged. The bank thinks risks to economic growth are now more finely balanced and is more confident on the eurozone's economic outlook.
•    Markets generally shrugged off a number of political and geopolitical tensions.

This formula, attributed to President Carter’s former advisor, Zbigniew Brzeziński, has long seemed irrelevant in a Europe that would like to see itself as “posthistoric”, peaceful, and economically integrated. But reality came crashing down over the last few months, with war returning to the Union’s doorstep, and the need for a strategic awakening. Europe is rediscovering a forgotten truth: if it is unable to defend itself, it shall have neither political sovereignty nor economic independence. Defence is the foundation that determines all the other fundamentals.

We are proud to announce that David Hayon Benchimol, our Head of Sales Latam and US Offshore, has once again been honored by winning the 2025 Citywire Americas Distribution Awards in the category of "Best Americas Wholesalers" for the second consecutive year.

The political divide within the National Assembly left little doubt about the fate of the Bayrou government, and even though the latter wanted to believe in it until the end, the vote of confidence ultimately resulted in failure, hastening his resignation and the fall of his government. France thus finds itself in the same situation as last year after Mr. Barnier's departure and is expected to experience its 5th Prime Minister in three years, signaling the significant political instability characterizing the country since the beginning of E. Macron's second term. Faced with an unprecedented tripartition of the political landscape under the Fifth Republic, the president now has three options before him, which we present here in order of most to least likely according to us:

The development of cities has historically been the cradle of major changes, be it technological progress or social, political, economic and cultural progress. And this will be increasingly the case in the future. The city of the future is already taking form. It is greener, more flexible and accessible, automated, focused on technology and innovation, better monitored, and home to the head offices of large companies and a broad array of services. Despite inequality issues, the continued growth of cities could provide numerous attractive investment opportunities. 

•    Despite the current political uncertainty, French government debt is still easily finding buyers, with the France’s treasury department successfully raising € 11bn. 
•    Fiscal risk weighed on the UK’s long bonds, with 30-year gilt yields reaching highs not seen since 1998.
•    US Treasury yields were under pressure this week, as the 30-year bond revisited 5% before poor economic data caused it to fall back.

At the Rimini Meeting, Mario Draghi made a harsh assessment: Europe believed that its economic power was enough to secure its geopolitical role. Recent events (war in Ukraine, tensions with the United States, rivalry with China) have dispelled this illusion. The European Union, a spectator to major upheavals, must transform itself if it wants to defend its fundamental values: democracy, freedom, sovereignty, and prosperity.

On either side of the Atlantic, these past few weeks have been bustling with news. Although we chose not to adjust our allocations in response to these headlines, we did strengthen several of our convictions and have identified new factors calling for vigilance.