Q3 Multi-Asset Perspectives

AI-driven capital spending, inflation and political uncertainty are making portfolio resilience more important than precise market timing.

• Global equities gained 1.3% in local-currency terms in Q3 2026, while investors questioned whether hyperscalers’ AI infrastructure spending would pay off; Morgan Stanley estimates that five major operators will spend USD 805 billion in 2026.
• US long-term yields rose as growth expectations and the term premium increased, with the additional policy-related “insanity premium” reaching nearly 0.9% of a total yield above 4.5% by mid-August.
• Trade tensions and the Iran war added to inflation risks: Brent crude rose from USD 73 per barrel at the start of the quarter to close to USD 100 by the end of September, while the Fed raised rates to just under 4%.
• Equity valuations remain demanding, with the Shiller CAPE ratio at 41x, while tight credit spreads and volatile long-dated government bonds offer less attractive compensation for risk.
• There is evidence that AI demand is real: Microsoft and Alphabet had combined remaining performance obligations of more than USD 1 trillion at the end of Q2, although regulatory or technological setbacks could still trigger a sharp market reaction.

Takeaway: Investors should retain diversified equity exposure for long-term growth but manage risk through portfolio resilience, favouring short-dated bonds and gold over tight-spread credit and longer-dated government bonds.