Monthly Economic Overview Αpril 2025

(with high-level asset-allocation considerations)

Key data	Market pulse	Allocation thoughts
GDP: -0.3 % q/q in Q1; consumer spending +1.8 %; cap-ex on equipment +22.5 %	Core PCE seen at 3.3 % as tariffs feed through; labour market still tight	• Near term: resilience in household demand argues for a neutral-to-slight-overweight to U.S. large-cap equities—especially domestic-oriented consumer & services names. • Medium term: margin pressure from higher input costs suggests adding quality and low-volatility factors. • Rates: front-end Treasury yields may stay sticky; consider a barbell (short T-bills for liquidity plus 10-year bonds as recession hedge).

Key data	Market pulse	Allocation thoughts
GDP: +0.2 % q/q	CPI at 2.2 %, within target	• Credit: prospects of ECB rate cuts favour investment-grade corporates. • Equities: keep a benchmark-weight but tilt toward defensive sectors (health-care, staples) given fragile growth. • FX: euro likely range-bound; limited tactical opportunity unless trade war worsens.

Key data	Market pulse	Allocation thoughts
GDP: +5.4 % y/y in Q1	Beijing responding to 145 % U.S. tariff with 125 % counter-tariff	• Equities: maintain selective overweight in domestic A-shares tied to internal consumption and policy priorities; avoid export-heavy manufacturers. • Fixed income: PBoC easing bias supports on-shore government and high-grade policy-bank bonds for carry. • EMFX: yuan volatility likely; hedge any unprotected RMB exposure.

Key data	Market pulse	Allocation thoughts
GDP: forecast 0.8 % in 2025	Inflation to peak near 3.6 % by autumn	• Gilts: downward growth revisions and gradual BoE cuts make intermediate Gilts attractive duration hedges. • Equities: preference for FTSE 100 multinationals with foreign-currency revenue to mitigate domestic weakness. • Credit: favour short-dated, high-quality sterling corporates over cyclicals.

Macro backdrop: IMF has lowered 2025 world-growth expectations and lifted inflation forecasts, citing tariff-induced uncertainty.
Risk assets: Earnings dispersion will widen; favour quality and cash-flow visibility across regions.
Fixed income: With three major central banks tilting dovish, duration again provides ballast, but be selective—U.S. curve still offers better real yields than core Europe or Japan.
Real assets & commodities: Persistent geopolitics and supply-chain repricing underpin moderate allocations to gold and broad commodities as inflation hedges.
Cash & liquidity: Maintain elevated liquidity (~5-10 % of portfolio) to exploit episodic drawdowns driven by headline risk.
Diversification principle: Escalating bilateral tariffs amplify idiosyncratic shocks; a balanced, multi-asset framework—50–60 % global equities, 30–35 % high-grade bonds, 5–10 % real assets—remains the core starting point, adjusted to individual risk tolerance.