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Equities have recovered strongly from the tariff shock earlier in the year. Dollar weakness vs Sterling has weighed on the relative performance of US equities; however, this was a step-change and there are concerns for Sterling too. Gold has continued to perform very strongly on the “debasement trade” and Central Bank buying. Within Bonds, Emerging Markets are in better shape than Developed Markets, in our view.
The “Donroe doctrine” marks a new era. And a return to spheres of influence
On 4th December 2025, the Trump administration published its 2025 National Security Strategy (NSS).
The strategy envisages, accepts and even promotes return to great power diplomacy, realpolitik and spheres of influence. The NSS was controversial primarly for its criticism of European allies that made Vance’s 2025 Munich Security speech seem less like of an aberration and more of stated policy. The NSS is the stated intention of the Trump administration and actions will continue to follow policy. 
The US equity market has pushed on higher this year fuelled by the AI boom, and investors are beginning to question whether the environment resembles the latter half of the 1990s with its dotcom boom (and subsequent April 2000 bust). While valuations in certain areas look stretched, the broader market picture is more mixed.
With the dollar down 20% since 2022, hedging looks tempting. But UK debt, housing risks, and BOE policy suggest sterling could be even more vulnerable.
Parallels are drawn between the mid-1990s tech revolution and today's AI-driven surge in the US equity market. While valuations appear stretched, the underlying conditions are more measured than the dot com era. The US economy continues to show resilience with AI-led productivity gains and potential rate cuts shaping the outlook.
In our latest investment outlook for 4q25, we discuss how markets have moved towards resolution.
Please join Natasha Sarkaria (BlackRock) and Henry Cobbe, Hoshang Daroga and new arrival Mike Bell (Elston) for this updated Outlook webinar on Thu 9 Oct 2025 at 1030am. Subscribe to our weekly newsletter to get all our insights to your inbox (for UK financial advisers only) Read more to register Medium-term concerns remain on US growth and equities valuations. Any US recession would likely be global. Near term downside risks to the economy are greater in Europe and the UK.
Whilst there have been structural and trading shifts driving Dollar weakness, there is downside risk to Sterling too.
Under pressure
In recent months, the U.S. dollar has come under pressure, with many observers attributing its weakness to the perceived end of American exceptionalism and a supposed rotation of capital flows out of the U.S. This narrative has gained traction alongside the belief that the eurozone may be on more solid footing than previously thought. However, in truth, there have been no significant flows out of the U.S. Figures published by the US department of Treasury debunks the claim for rotation out of the US. The primary driver of the dollar’s decline has been hedging activity, not structural reallocations or changes in economic fundamentals. We believe that, over time, fundamentals will reassert themselves—and when they do, the dollar is likely to recover further. 
Where next for the UK economy? Hermione Taylor outlines the challenges at our Elston Investment Forum 2025.
Read on for more details. 
Hermione Taylor, the FT Investor’s Chronicle Economist, shared her outlook for the UK economy at the Elston Investment Forum
Hoshang Daroga (Elston) and Natasha Sarkaria (BlackRock) discussed the outlook for markets at our June 2025 Elston Investment Forum. Watch the video or read on to find the key findings are summarised here.
Watch our latest Global Market Outlook with Hoshang Daroga (Investment Director, Elston Consulting) and Natasha Sarkaria (Investment Strategist, BlackRock) speaking at our Elston Investment Forum 2025.
Read on for more details. 
Where next for US trade policy, economy and markets ? We catch up with Greg Swenson on what's Trump doing and why.
Watch the presentation from Greg Swenson at our Elston Investment Forum 2025 Read on for more details. 
Our latest monthly commentary for investing in UK gilts. Includes latest gilts UK news. Update on latest gilt yields. Changes in Gilt yield curve. Gilts auction results. Gilts ETF flows. For UK financial advisers.
 In this podcast for FT Adviser, Henry Cobbe explores the idea of an Operation Brit-Twist.
Listen to The Asset Allocator Podcast here 
Our latest monthly commentary for investing in UK gilts. Includes latest gilts UK news. Update on latest gilt yields. Changes in Gilt yield curve. Gilts auction results. Gilts ETF flows. For UK financial advisers.
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