From Washington to Tokyo, politics is jolting markets. Japan’s surprisingly unison leadership nomination sparked a local equity surge, while a potential Gaza ceasefire lifts diplomatic hopes – but the US government shutdown casts a veil of uncertainty. With federal agencies on pause, US macroeconomic data flow is drying up, creating a vacuum for investors. Meanwhile, French markets remain cautious as Macron’s reshuffled cabinet faces mounting political headwinds. Beyond the noise, the global economy is not offering much comfort. China’s Golden Week revealed underwhelming consumer spending. In the US, services sector growth has slowed, while price pressures remain uncomfortably sticky. All of this sets the stage for a defining week in central bank policy.
The policy calendar in the days ahead is indeed extremely busy
The Fed (via its meeting minutes), the ECB, the SNB, the BoE, and others are all in play. What markets need now is guidance. The question is no longer whether growth is slowing – it is. The question is what monetary authorities plan to do about it. Expectations remain high that central banks will lean on the dovish side, but the tone and structure of their messaging will be critical. Even a hawkish hold may trigger risk aversion if not paired with credible forward guidance.
Policy support is under way, as we have outlined in our year-end outlook. The exact timing of the support measures may call for patience, though. Meanwhile, precious metals remain our favoured hedge – gold is eyeing USD 4,000, and we reiterate our bullish stance on silver. Beyond that, the focus is shifting towards defensive growth and high-quality earnings. Taking cybersecurity as an investment theme combines both, as the rising value created on behalf of customers clearly shows.
Cybersecurity: It is enough, until it is not
If it was an economy, cyber crime would rank third behind the US and China. Artificial intelligence (AI) has changed the speed of attacks. It scales outreach, makes lures sound native in any language, and cuts the time from the identification of a new weakness to a deployable attack. However, AI also helps companies to defend themselves. AI assistants embedded within tools consolidate alerts and add context, reducing noise and enabling a faster containment of threats, while providing a clear audit trail.
New rules have increased the pressure on corporations to improve safeguards. The US requires faster public disclosure. Europe is tightening duties, and fines show that weak safeguards carry real costs. The US, the EU, and the UK are funding measures to improve identity and access, detection and response, secure access for hybrid work, cloud and software supply chain security, data protection, and managed operations.
Cybersecurity spending remains on the rise, accounting for an ever-growing share of information technology budgets. This points to sustained revenue growth for the sector.
Gold: A strategic asset in a shifting landscape
The gold market reached the milestone of USD 4,000 per ounce. Up more than 50% year-to-date, prices are on track to record their best performance since 1979. That year marked gold’s previous inflation-adjusted record high. The past two weeks’ performance feels a lot like ‘the trend is your friend’ as we struggle to see specific reasons pushing prices up that swiftly and sharply.
Beyond the established narratives of a slowing US economy, lower US interest rates and a weaker US dollar, which have been luring safe-haven seekers into the gold market since the start of the year, the latest leg up was further fuelled by concerns about the independence of the US Federal Reserve and the US government shutdown. That said, the impact of both factors on the US economy and the US dollar seems very limited at least for now.
Outside of precious metals, this assessment is shared by financial markets more broadly. Arguably, the most tangible impact of the shutdown on gold is the delay in weekly futures positioning data. Considering the past two weeks’ price performance, speculative futures positioning has likely turned more bullish, with trend followers and technical traders entering the market in the run-up to the USD 4,000 per ounce milestone. What could stop this record run? Historically, major corrections were almost always caused by improving economic prospects and tightening monetary policy. Considering that the US Federal Reserve just resumed its easing cycle, we see a very limited likelihood for such a scenario.
A more likely one is speculators’ fatigue, i.e. all the good news already being priced in and this latest leg of the rally being a case of ‘too fast, too far’. That said, such fatigue should not cause a correction, but rather a short-term and temporary setback as we still see a favourable fundamental backdrop for gold. The cooling US economy paired with the prospects of lower US interest rates and a weaker US should continue luring safe-haven seekers into the market.
Watch the video or read the article with business journalist Hannah Wise to learn about the different options for investing in gold: