MARKETS HAPPY HOUR PODCAST

In this week’s Markets Happy Hour podcast we are joined by special guest Christian Abuide, Christian brings an international perspective to our discussion, with more than 20 years’ experience managing multi-asset portfolios and asset allocation strategy for private and institutional clients. He is the former Head of Asset Allocation at Lombard Odier, where he chaired the firm’s Global Investment Committee with responsibility for investment strategy and positioning over CHF 200bn in assets. Our conversation is heavily grounded in portfolio construction and how to counter some of the current stresses in market where a hierarchy of risk is prevailing with investors forced to sift through the risks and rank them, acting to protect or participate accordingly. We start with the shift in inflation expectations and reflect how they have ticked up in 2026, driven by the geopolitical stresses, while they remain heading downwards in 2027. We reflect on how this has been a bad outcome for the balanced portfolio – with the traditional 60/40 portfolio seeing its worst month since 2022. One question is asked regarding how many investors still hold 60/40 portfolios at this stage, given the low return potential in bonds, particularly with a backdrop of persistently higher inflation. The conversation turns to oil prices and demand destruction and we look at a few examples where this is already taking place – such as in Malaysia where there has been a return to remote working in some sectors in order to save on fuel. Moving to the situation for government bonds we reflect on a few interesting factors in the bond market today – volatility seems to be low, while rates on government bonds have been spiking in countries such as the UK and Italy, as well as in the US over the past month. There is a discussion of the foreign holdings of US treasuries, which are continuing to see their own form of “demand destruction”, while recently government bonds have started to see a shift back into favour as the expectations turn to rate cuts once more. Equity markets continue to demonstrate their core fortitude with earnings doing the “heavy lifting” and noise such as the Space X IPO and a number Open AI fundraise indicating the strong underpinning of FOMO that is driving equity market flows.