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Insights

Asset Allocation update – July 2025

The consensus view in financial markets is that tariffs are on a deescalating path, but uncertainty remains high and there is a risk of complacency. Economic fundamentals are reasonable, and both companies and consumers have adjusted well to the ‘new normal’ interest rate environment.

Earnings growth appears to be robust and the path for interest rates in most economies is lower – albeit not much lower. In the short term there is some ‘fog’ in the data as companies increased activity in the first quarter to ‘front run’ the implementation of tariffs. The second quarter saw these built-up inventories being drawn down and as we move into the third quarter, there is some ambiguity around underlying demand. Likewise, the economic impact of tariffs tends to come with a significant lag, meaning it will take some time for the data to ‘settle down’ and to
gauge their full impact.

At a glance – equities and fixed income

Equities

We continue to be ‘mildly positive’ on equities. We are, however, mindful that a lot of good news is priced in and there is a risk of complacency around tariffs. There remains scope for the ultimate level of tariffs to be higher than the consensus view of around a 10% baseline. But economic fundamentals remain reasonable and earnings growth expectations are holding up well. Overall, we do see some risks on the horizon but provided tariff issues do not escalate, then the recent market momentum could have further to go.

Fixed income

We have maintained our ‘neutral’, view on bonds having recently moved higher from a slight underweight. We see a more stable environment in government bonds but will watch the US budget process with some caution. We have taken some profits in high yield credit having seen a very strong rebound from the spike in yields witnessed in the wider market selloff around ‘Liberation Day’ in April.

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Important information:

For professional investors only (not to be used with/ passed on to any third party). For marketing purposes.

 

This document contains information by Columbia Management Investment Advisers, LLC (CMIA). CMIA is an affiliate of Columbia Threadneedle Investments.

 

CMIA is registered as an investment adviser with the U.S. Securities and Exchange Commission.

 

The materials relating to the CMIA included in this document have been approved and provided by CMIA.

 

The views expressed are as of the date given, may change as market or other conditions change and may differ from views expressed by other CMIA associates or affiliates.

 

Past Performance does not predict future returns, and no forecast should be considered a guarantee either. Your capital is at risk. Since economic and market conditions change frequently, there can be no assurance that the trends described here will continue or that any forecasts are accurate.

 

This material should not be considered as an offer, solicitation, investment/legal/tax or accounting advice or an investment recommendation. The mention of any specific shares or bonds should not be taken as a recommendation to deal.

 

This communication is valid at the date of publication and may be subject to change without notice. Information from external sources is considered reliable but there is no guarantee as to its accuracy or completeness.

 

In the Middle East: This document is distributed by Columbia Threadneedle Investments (ME) Limited, which is regulated by the Dubai Financial Services Authority (DFSA).  The information in this document is not intended as financial advice and is only intended for persons with appropriate investment knowledge who meet the regulatory criteria to be classified as a Professional Client or Market Counterparty and no other person should act upon it. This document and its contents and any other information or opinions subsequently supplied or given to you are strictly confidential and for the sole use of those attending the presentation.  It may not be reproduced in any form or passed on to any third party without the express written permission of CTIME. By accepting delivery of this presentation, you agree that it is not to be copied or reproduced in whole or in part and that you will not disclose its contents to any other person.

 

In the UK: Threadneedle Asset Management Limited, No. 573204 and/or Columbia Threadneedle Management Limited, No. 517895, both registered in England and Wales and authorised and regulated in the UK by the Financial Conduct Authority.

 

In the EEA: Threadneedle Management Luxembourg S.A., registered with the Registre de Commerce et des Sociétés (Luxembourg), No. B 110242 and/or Columbia Threadneedle Netherlands B.V., regulated by the Dutch Authority for the Financial Markets (AFM), registered No. 08068841.

 

In Switzerland: Issued by Threadneedle Portfolio Services AG, Registered address: Claridenstrasse 41, 8002 Zurich, Switzerland.

 

Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies

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Important information:

For professional investors only (not to be used with/ passed on to any third party). For marketing purposes.

 

This document contains information by Columbia Management Investment Advisers, LLC (CMIA). CMIA is an affiliate of Columbia Threadneedle Investments.

 

CMIA is registered as an investment adviser with the U.S. Securities and Exchange Commission.

 

The materials relating to the CMIA included in this document have been approved and provided by CMIA.

 

The views expressed are as of the date given, may change as market or other conditions change and may differ from views expressed by other CMIA associates or affiliates.

 

Past Performance does not predict future returns, and no forecast should be considered a guarantee either. Your capital is at risk. Since economic and market conditions change frequently, there can be no assurance that the trends described here will continue or that any forecasts are accurate.

 

This material should not be considered as an offer, solicitation, investment/legal/tax or accounting advice or an investment recommendation. The mention of any specific shares or bonds should not be taken as a recommendation to deal.

 

This communication is valid at the date of publication and may be subject to change without notice. Information from external sources is considered reliable but there is no guarantee as to its accuracy or completeness.

 

In the Middle East: This document is distributed by Columbia Threadneedle Investments (ME) Limited, which is regulated by the Dubai Financial Services Authority (DFSA).  The information in this document is not intended as financial advice and is only intended for persons with appropriate investment knowledge who meet the regulatory criteria to be classified as a Professional Client or Market Counterparty and no other person should act upon it. This document and its contents and any other information or opinions subsequently supplied or given to you are strictly confidential and for the sole use of those attending the presentation.  It may not be reproduced in any form or passed on to any third party without the express written permission of CTIME. By accepting delivery of this presentation, you agree that it is not to be copied or reproduced in whole or in part and that you will not disclose its contents to any other person.

 

In the UK: Threadneedle Asset Management Limited, No. 573204 and/or Columbia Threadneedle Management Limited, No. 517895, both registered in England and Wales and authorised and regulated in the UK by the Financial Conduct Authority.

 

In the EEA: Threadneedle Management Luxembourg S.A., registered with the Registre de Commerce et des Sociétés (Luxembourg), No. B 110242 and/or Columbia Threadneedle Netherlands B.V., regulated by the Dutch Authority for the Financial Markets (AFM), registered No. 08068841.

 

In Switzerland: Issued by Threadneedle Portfolio Services AG, Registered address: Claridenstrasse 41, 8002 Zurich, Switzerland.

 

Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies

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