In the United States, inflation is expected to rise significantly in the coming months due to higher tariffs and the sharp depreciation of the dollar since the beginning of the year. Nevertheless, the risk of a recession remains low, supported by strong household and corporate balance sheets.

In the Eurozone, the euro’s strong appreciation is likely to push inflation below 2%, giving the European Central Bank (ECB) more flexibility to ease policy if needed. Germany’s planned fiscal stimulus should support growth, though political uncertainty in France and the negative impact of a strong euro on exports remain key risks.

The United Kingdom is facing growing fiscal credibility concerns after the Labour-led government failed to deliver on previously announced spending cuts. Meanwhile, Asia ex-Japan continues to stand out for its solid growth prospects and macroeconomic stability, with moderate inflation and balanced external accounts. Japan could see modest rate hikes if wage growth gains traction, although structural headwinds suggest rates will remain low overall.

Against this backdrop, a cautious approach to equities is warranted, favoring Europe and Asia over the U.S. alongside selective exposure to fixed income in countries with declining inflation and sound fiscal fundamentals.

Read the Macro Update for July 2025

Alantra

Alantra is an international financial services firm with over 600 professionals representing 35 nationalities across 24 offices. Founded in 2001, Alantra provides alternative asset management, private capital and financial advisory services to companies, families and investors operating in the mid-market segment.

Information provided is general information and is for educational purposes only, and does not include, or constitute as, financial product advice.