Asian/European Markets

For more than four decades, PIMCO’s Secular Forum has provided a disciplined framework for stepping back from short-term market noise to assess the structural forces that will shape the global economy and markets over the next five years. Yet rarely has this exercise been more consequential than it has recently.

After more than three years of underperformance, our prognosis for global health care stocks remains positive. The sector now offers a broader set of high-quality companies at valuations that appear increasingly disconnected from fair value.

Begin with the print itself, because the headline flatters the internals only slightly. The bulk of May's gains came from leisure and hospitality, which added 70,000 jobs, nearly half of them in food services and drinking places; local government contributed 55,000, health care 35,000, and manufacturing a modest 7,000, while financial activities actually shed positions.

Equity markets should remain supported by strong earnings and capital investment trends through 2026, but market concentration and macro risks leave less room for error.

The war in Iran is putting pressure on airlines. Higher jet fuel prices are cutting into profit margins, and the risk of a prolonged conflict may reduce travel demand in Europe and Asia. But for lessors, these gathering clouds may come with a silver lining.

In Part 1, we explored why Dollar Dominance Remains Alive and Well. Today, we will explore the stronger-dollar trade, the one macro trade that nobody is sized for.

The Numbers Are Staggering – The Magnificent Seven stocks now carry a combined market cap larger than the GDPs of Germany, Japan, India, and the UK combined. Meanwhile, 2025 tech-sector capital expenditures rivaled the peak-year spending of the Manhattan Project, rural electrification, the Apollo moon shot, and the Interstate Highway System — all at once.

Interest rates remain one of the primary concerns for investors as Kevin Warsh has officially assumed leadership at the U.S. Federal Reserve (Fed). While we believe the possibility of a rate cut has diminished considerably, we are not yet expecting additional rate hikes.

Fertilizers sit at the center of this transmission mechanism. As much as a third of the global supply of these commodities passes through the Strait of Hormuz, which has largely been closed for three months. This has triggered shortages and a price spike.

In case you’ve been living under a rock for the past few months, three of the world’s largest and most consequential private companies—SpaceX, Anthropic and OpenAI—are preparing to go public in the same year. Together, they could add nearly $4 trillion in market cap to public markets.

As we go to press, fighting in the Mideast has escalated, sending crude higher, but stocks, in early Monday trade, have shown remarkable stability following Friday’s deep selloff.

Metals Focus has released its Gold Focus 2026 report. It includes comprehensive historical supply and demand data for 2017-25 and its 2026 forecast.

The world is not ending. It is restructuring. But restructuring, as I noted at the outset, comes with an asterisk. What is really happening is a replacement, of assumptions, of guarantees, of the architecture that held everything together for eighty years.

In light of all this, our own view is that markets remain well positioned to continue to rally over the medium term, though given their stratospheric rise of late, a bit of a pullback might be in order in the short term.

The latest Emerging Markets Insights discusses companies across various sectors that have expressed cautious optimism for the second half of 2026 despite ongoing geopolitical pressures and higher input costs. Templeton Global Investments highlight what they observed at a recently attended summit.

The top-performing non-leveraged ETFs of 2026 span a distinct blend of digital assets, next-generation semiconductor technology, and localized international equity plays. For advisors assessing portfolio allocations heading into the second half of the year, these performance figures highlight a sustained risk-on appetite among investors.

Climate change has become a defining force in geopolitics. As governments respond to record heat waves, floods, wildfires and droughts, their policies and economic posturing are reshaping manufacturing, trade and energy security across the capital markets.

The top-performing non-leveraged ETFs of 2026 span a distinct blend of digital assets and localized international equity plays.

The first phase of the artificial intelligence investment trade was relatively straightforward: if you wanted to capture the AI boom using familiar names, you bought semiconductors.

Despite rising global yields and renewed inflation concerns, equities moved higher in May on the back of a strong US earnings season and continued momentum in AI-related stocks. The tech-heavy Nasdaq Composite gained 8.4% for the month, while the S&P 500 rose 5.3% and the Dow Jones Industrial Average was up 2.9%.

Emerging markets offer important exposure to economic growth through rapid industrialization, natural resource endowments, and strong demographic dynamics.

Learn what's in store for the remainder of 2026 and the challenges that lie ahead in our mid-year outlook for U.S. stocks and the economy.

Get ready for a magnificent month, and then some. Mega-cap tech stocks dominate the corporate event calendar in June, already highlighted by NVIDIA (NVDA) CEO Jensen Huang’s keynote address at Computex 2026 in Taiwan earlier this week, one of many major conferences.

For the dollar-denominated investor weighing how to position for the back half of 2026, last week tightened a thesis we have been building all year.

Businesses are racing to build the physical infrastructure that makes AI usable at scale – data centers, the graphics processing unit (GPU) hardware stack, power, and cooling.

If you’re not familiar with the name Leopold Aschenbrenner, you should be. A 24-year-old wunderkind, Aschenbrenner was hired by OpenAI in 2023 to work on the company’s “superalignment” team, essentially trying to figure out how to keep AI systems safe once they become smarter than the people building them.

Economies around the world aren’t just reliant on AI investments for growth. The appreciation of AI stocks has supported spending, which is following “K-shaped” patterns. A significant correction to the valuations of tech leaders would therefore be even more likely to result in recession.

Vocabulary is a power builder. Every time I use the word “hegemonic” in a conversation, I see my listeners’ eyebrows go up as if to say, “what does this guy know that I don’t?” Then again maybe they’re just signaling that I’m full of more than baked beans.

For the last eight years, GMO’s Asset Allocation team has held a differentiated view on Japanese equities. Long before Japan re‑entered the global investment narrative, we argued that the country was undergoing slow but durable structural changes aimed at improving corporate governance, growth, and capital efficiency. These reforms were never expected to deliver quick results. Instead, we expected them to compound quietly over time.

The dollar is supposed to be dying. We’ve heard that argument for the better part of a decade, and it’s getting louder, not quieter. Dollar dominance isn’t fading. In fact, the events of late April 2026 just delivered the loudest counter-signal in years.

Artificial intelligence (AI) poses many ethical issues that may translate into risks for consumers, companies and investors. AI regulation, which is developing unevenly across jurisdictions, adds to the uncertainty. The key for investors, in our view, is to focus on transparency and explainability.

What is unusual about today, and I mean genuinely unusual, historically unusual, is that the people building the equivalent of Newcomen's engine today know exactly (or think they do) what they are building. They are not just pumping water. They “know” the vast potential.

As globalization gives way to reshoring and resurgent resource nationalism, emerging markets may offer fresh alpha opportunities through their ability to supply the raw materials required to fuel the AI boom.

Kevin Warsh was officially sworn in as 17th Federal Reserve chair on May 22. Warsh is likely to build consensus at the Fed rather than push for aggressive action to cut rates.

Commodity market trends: Commodity markets have been on an impressive, and volatile, run so far this decade, with leadership oscillating between energy and precious metals. Not surprising, after commodities’ “Lost Decade” of the 2010s, given the asset class tends to move in long capital cycles.

Equity investors are facing monumental questions about their allocation strategies in a new market regime. Market concentration has risen sharply, valuations have climbed to record highs in parts of the market and factor volatility has dominated returns.

Recent market volatility and the conflict in Iran have understandably pushed many emerging market investors to the sidelines. But periods of uncertainty have historically offered attractive entry points into emerging market debt (EMD), particularly when underlying fundamentals are improving and asset flows are likely to increase.

On the surface, last week looked engineered to embarrass our positioning. The dollar index climbed to a six-week high above 99.3 by Friday and finished the week roughly flat at those levels.

An unexpected rap on your front door is sometimes cause for anxiety. You are not sure who or what is out there, wanting to get in.

Contrary to what legal television series portray, verdicts rarely turn on a single moment of drama. They take shape gradually, as evidence accumulates and a broader narrative comes into focus.

Chris Galipeau discusses high-conviction insights that go beyond media headlines.

Global equity markets moved modestly higher this week as first-quarter earnings season continued to deliver strong results.

Despite these higher costs, a projected 45 million Americans are expected to travel at least 50 miles from home this weekend, setting a new record. Close to 40 million will drive while some 3.7 million will fly.

Last Friday closed with the 10-year Treasury yield at 4.60%, a one-year high, and the doom commentary about rising interest rates was waiting before the bell even rang. Hyperinflation. Bond market breakdown. Paradigm shift. A 1981 fair-value retest.

Since the post-COVID recovery began, U.S. nonfinancial corporations have generally managed capital conservatively. They have kept credit metrics stable and, in many cases, actively improved them. That discipline was not entirely voluntary: The sharp adjustment in funding costs triggered by the Federal Reserve’s 2022–2023 rate hiking cycle raised the bar for incremental borrowing and pushed management teams toward balance sheet restraint.

I have often written about one of the few indicators in economics that has earned its reputation over the years, and for good reason. It has preceded virtually every US recession since World War II. I’m talking about the inverted yield curve.

In this second quarter update, Western Asset believes global fixed-income markets face a more complex backdrop as geopolitics, rapid AI adoption and private credit scrutiny intersect.

For private equity firms, capital flexibility is prized today. Merger-and-acquisition (M&A) activity has cooled, while commodity prices and artificial intelligence (AI)-driven disruption have heated up, creating uncertainty for investors. This makes it more challenging to sell portfolio companies, so private equity firms are holding investments longer. As a result, many firms are turning to net asset value (NAV) loans for capital needs.