Macro Update – November 2024

Trump’s decisive election victory, coupled with Republican control of Congress, introduces significant uncertainty to global markets. Over the coming weeks, we will closely monitor his policy direction, particularly on tariffs, immigration, and fiscal spending.

While disruptive scenarios remain a risk, our central case assumes a “moderate Trump” presidency. This would support stable growth in the U.S. and help mitigate potential global economic volatility. Under this scenario, the Eurozone could see a modest rebound, while emerging Asia continues its strong performance.

U.S.

U.S. macroeconomic data shows resilience, with growth expected to align with its medium-term potential. Current dollar levels and long-term interest rates should moderate expansion, easing wage pressures and core inflation.

The Federal Reserve is likely to maintain a measured approach, with rates moving toward a neutral range of 3.5–4%. We anticipate this could be achieved as early as Q1 next year, creating a stable environment for continued investment and consumption. However, the risk of aggressive fiscal expansion or tariff hikes by Trump could disrupt this outlook.

Eurozone and UK

The Eurozone is expected to benefit from improving private consumption fundamentals, including low unemployment, rising wages, and a recovery in consumer sentiment. Additionally, the ECB is likely to maintain a dovish stance to address risks from Trump’s potential policies.

In the UK, economic activity remains stable, supported by political stability and credible fiscal policies. The government’s increased focus on public investment further strengthens its position, making it relatively insulated from potential global disruptions.

Asia

Emerging Asia continues to show robust growth and macroeconomic stability. Inflation is well-managed, and fiscal positions are healthier than many developed economies.

China’s stimulus measures, particularly those targeting private consumption, are starting to yield results, supporting economic activity. In Japan, rising wages and stable inflation suggest above-potential growth in the coming quarters, though the Bank of Japan is expected to remain cautious with monetary policy.

Scenario of an ‘aggressive Trump’ and other risks

Aggressive trade policies by Trump, which could trigger retaliatory actions, disrupt global trade, and increase inflation.
Fiscal imbalances in the U.S., where unchecked tax cuts could lead to higher deficits without meaningful economic growth.
Geopolitical uncertainties, including Trump’s potential approaches to conflicts in Ukraine and the Middle East.
Despite these risks, our central case of a “moderate Trump” remains the most likely scenario, supporting cautious optimism in global markets.

Equities: We remain moderately constructive on equities, favouring U.S. small- and mid-caps and emerging Asia. UK equities also offer relative resilience in this environment.

Government bonds: German Bunds around 2.40–2.50% yield are attractive as a hedge against risks, while we continue to avoid long-duration U.S. Treasuries.

Corporate bonds: High-quality corporate credit remains a preferred choice over sovereign bonds with weaker fundamentals.

Currencies: The U.S. dollar and developed-market currencies with strong fundamentals, such as GBP and AUD, remain attractive hedges. Select emerging-market currencies like INR and IDR also offer upside potential.

This report has been prepared by AMCHOR Investment Strategies SGIIC, S.A. (“AMCHOR IS”) an entity participated by the Alantra Group and incorporated as an investment firm authorized and supervised by the CNMV, registration number 273 with registered office at Calle Velázquez Nº 166, 28002 Madrid (Spain).

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