Global Macro: Hawkish pivot shapes risk landscape – HSBC

HSBC Asset Management’s Investment Weekly highlights how higher Oil prices, China’s export surge and US AI investment are reshaping the global macro backdrop. The report says these forces are driving a hawkish shift at central banks including the ECB, Bank of Japan, Bank of England and Federal Reserve. Despite spikier inflation, HSBC believes supernormal profits and manageable funding costs can still support risk assets through 2026.

Central banks react to two shocks

"The Fed is widely expected to keep rates unchanged and to remove any bias towards easing this year from its statement and projections."

"Overall, spikier inflation and a rise in hawkish central bank thinking reinforce the complicated macro landscape."

"While episodic volatility is a risk, supernormal profits and a manageable cost of capital mean that markets can continue performing well through the rest of 2026."

"While risk assets saw further volatility, hopes of geopolitical de-escalation supported performance last week."

"These forces are creating a difficult environment for central banks and have, so far, driven a hawkish pivot."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)