Key market-moving themes
- Fed projects slower US growth and higher tariff-related inflation, but Powell describes these impacts on inflation as ‘transitory’; dot plots suggest 2 rate cuts by YE25;
- US/Russia peace talks on Ukraine; little progress made, muted market reaction;
- German spending package finally given green light.
Our view
- Global Defence: While EU defence stocks are in fashion, US defence stocks represent more value now - Long US defence stocks (worst performers YTD); await corrections in EU defence;
- US / Russia peace talks on Ukraine: Noise to remain high amid negotiations in Saudi Arabia - Europe to outperform short-term if ceasefire. Long-term overweight US vs Europe.