The Schroders Multi-Asset team remains positive on equities, but believes investors should pay closer attention to a changing risk environment as market optimism becomes increasingly reflected in valuations.
Growth continues to be resilient, particularly in the United States, and we continue to see earnings momentum, which supports a positive view on equities.
Bond market investors appear to have reached the “acceptance” phase for “higher-for-longer” rates, and for the first time in years rate expectations are now aligned with Schroders’ economists’ views.
Higher yields have also raised concerns about equity valuations. We view the rise in yields as reflecting higher nominal growth which should be supportive of equities.
A more disorderly sell-off at the longer end of yield curves would challenge this view, and the main risk to our forecasts is that longer-term bond yields rise more than expected, causing yield curves to steepen.
This could arise from concerns about central banks’ credibility when confronted with energy-induced inflation, or a flare-up in sovereign debt concerns, with France still looking vulnerable in that respect.
We continue to see gold as a hedge against some of these concerns. We believe that the oil price could correct lower in the short term as supply is picking up, however we continue to view energy stocks and mining stocks as a source of diversification given our bias to stronger rather than weaker growth and ever-present geopolitical risks.
Within equities we also continue to be positive on technology, recognising that earnings momentum is being driven by this sector.
But we are more cautious on US investment grade credit where valuations do not provide a sufficient cushion against the risk of deteriorating balance sheets.
Lastly, this month we take a positive view on the Japanese yen given attractive levels and the potential for tighter monetary policy out of Japan.
In conclusion, the positive cyclical environment still leads us to favour equities but rising bond yields are increasing the burden of proof.
You can access the full September 2026 multi-asset view from the Schroders multi-asset investment team here: Schroders multi-asset investment views – October 2026
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