Diversification Re-engineered
Multi Asset Tactical View: October 2026
Higher inflation, yields, and growth
September: Yields in focus
September was a difficult month for global equities as the widening Iran conflict intensified concerns about energy supplies, inflation and monetary tightening. AI-related volatility persisted, although technology stocks recovered from an earlier sell-off. Global bonds declined as surging oil prices and fiscal concerns pushed yields higher. The Fed, ECB and BoJ raised interest rates, while corporate credit also weakened. The US dollar strengthened on expectations of further Fed tightening, while the euro declined amid political and fiscal uncertainty. Brent crude briefly exceeded USD 100 per barrel before closing the month near USD 98. Gold fell as higher yields and dollar strength outweighed safe-haven demand.
Our take: Strong fundamentals
We remain constructive on global equities, as strong earnings continue to offset tighter monetary policy and energy-related risks. Emerging markets are our preferred equity region, supported by the AI cycle in South Korea and Taiwan, although subdued fundamentals in China remain a constraint. US equities are also sustained by robust AI-led earnings, but elevated valuations and rising yields require selectivity. Japanese equities benefit from improving revisions and policy support, while euro zone equities are supported by improving growth despite continued energy and stagflation risks.
We remain cautious on global sovereign bonds. US Treasuries face pressure from hawkish policy expectations, geopolitical uncertainty and competing issuance. Euro zone sovereigns are constrained by energyrelated inflation and fiscal strains. In credit, we are cautious on US high yield and EM fixed income, that despite resilient growth and relative stable spreads, can be challenged by higher yields and the recent dollar appreciation.
We still broadly favour commodities as an asset class. Oil benefits from a tighter supply backdrop. Copper is supported by grid investment and persistent supply constraints. We remain mildly constructive on gold, as fiscal deficits provide medium-term support. In currencies, we remain moderately positive on the US dollar against the euro, supported by higher US yields and resilient growth.
Tactical asset allocation views summary
These views reflect a short-term time horizon showing the direction and conviction of the team’s analysis based on both fundamental and systematic indicators. These views are independent of individual portfolio construction considerations.
Source: Bloomberg Finance L.P.; data as of 30 September 2026. Past performance does not predict future returns. Global equities are represented by MSCI AC World Daily TR, Global sovereign by FTSE World Government Bond Index – Developed Markets in USD, Commodities by Bloomberg Commodity Index, Currencies (USD) by Bloomberg Dollar Spot, US equities by S&P 500 Index, Euro-zone equities by MSCI EMU Index (EUR), Japanese equities by TOPIX Index (JPY), Emerging markets by MSCI EM NR, US treasuries by J.P. Morgan US Government Bond Index, UK gilts by J.P. Morgan UK Government Bond Index, Euro-zone sovereign by J.P. Morgan EMU Investment Grade Index, US high yield by Bloomberg U.S. Corporate High Yield, EM fixed income by J.P. Morgan EMBI Plus Index, Oil by S&P GSCI Crude Oil, Copper by BBG Copper TR, Gold by GOLD SPOT $/OZ. For currencies, the US dollar (USD) and the British pound (GBP) are represented by each respective currency vs. the euro (EUR) as well as the USD vs. the Japanese yen (JPY).
Trade idea of the month: Robotics and automation equities
Ageing populations, labour shortages and efforts to strengthen supply chains are driving demand for automation. Meanwhile, advances in AI, lower compute costs and better machine vision are allowing robots to handle more complex tasks. These structural trends could sustain earnings growth across the wider robotics and automation ecosystem, well beyond humanoid robots.
Expected changes in working-age populations (aged 15–64) until 2100
Source: United Nations, World Population Prospects 2024. The analysis uses the Medium fertility variant. Data are annual projections for 2025–2100 from the 2024 edition, covering the population aged 15–64. Indexed values show the percentage change in each geography’s population aged 15– 64 relative to 2025 (2025 = 0%) as a proxy for the change in working population.
Chart of the month: Global government bond yields
Repricing of future growth, and debt sustainability
Source: Bloomberg, Allianz Global Investors, data from 1 Jan 2026 to 2 Oct 2026 as at 2 Oct 2026. The information above is provided for illustrative purposes only, it should not be considered a recommendation to purchase or sell any particular security or strategy or as investment advice. Past performance, or any prediction, projection or forecast, is not indicative of future performance.
The rise in global government bond yields has been one of this year’s defining market moves, with the chart illustrating both its speed and broad reach. Surging oil prices created the risk of an inflationary shock, but central bank tightening has helped hold long-run expectations in check. Against this backdrop, inflation has contributed to higher yields, but structural forces have played a more important role, notably expanding government borrowing, additional financing needs associated with the AI investment build-out and optimism towards longer-term productivity. France is particularly exposed, as its heavy debt burden makes it more sensitive to shifts in funding conditions and fiscal confidence. The surge in global bond yields is not purely negative, however. Markets have repriced decisively, and the resulting carry now offers investors an attractive cushion against further volatility.