Market outlook: stocks, bonds and asset allocation
This archive brings together Leeway’s published market outlooks. Each CIO Perspective connects inflation, interest rates, growth, liquidity and market positioning with an assessment of equity, bond, currency and commodity markets. The resulting portfolio view states the corresponding overweights and underweights.
For investors, the CIO Perspective assesses how markets and macroeconomic forces interact. It does not judge the quality of an individual company, but adds capital-market and portfolio context to the company ratings.
Each issue preserves the assessment made at its publication date. Readers can therefore review which assumptions supported the allocation, which risks were identified and when the market outlook changed.
Further detail on the CIO Perspective is available in the methodology.
Market regime: Credible tightening into a persistent supply shock
The market is caught between central banks holding policy tight against persistent energy constraints and a structural shift where a shrinking pool of global savings must fund massive infrastructure and defense demands.
Overweight:
Portfolio spine: US T-bills, cash equivalents and short-dated TIPS., Intermediate (5-10 year) TIPS at real yields near multi-decade highs.
Underweight:
Long-dated nominal sovereign duration as an outright holding, French banks, insurers and other holders concentrated in domestic sovereign debt
Market regime: Nominal Absorption with Cross-Sectional Dispersion
The core tension of this market is that long-term bonds and equities are now priced by two entirely different groups. Bonds are priced by return-seekers who can refuse to participate, keeping yields elevated, while equities are elevated by automated, passive flows that ignore valuation.
Overweight:
Front-end real carry and curve steepeners, Japanese financials and yen optionality
Underweight:
Long-dated nominal sovereign duration, High-multiple AI application software
Market regime: Structural Shortage of Long-Dated Savings
Massive global spending on artificial intelligence infrastructure, European grid upgrades, and military rearmament is colliding with a world permanently short on long-term savings. The Federal Reserve is keeping base interest rates high to maintain credibility while quietly fixing short-term market plumbing.
Overweight:
Grid and power equipment (GEV, PWR), Gold bullion and miners (GLD, GDX)
Underweight:
Long-dated US nominal Treasuries (TLT), Thin-moat AI application software (IGV)
The consensus is waiting for a ghost. The broad market expects a classic sequence where a U.S. labor scare forces the Federal Reserve to cut rates, which in turn triggers a yen snap-back and a deleveraging event. That causal chain is broken.
Overweight:
Ultra-short U.S. Treasuries / Cash (BIL), Long-End and JPY Convexity (VIXY, FXY)
Underweight:
Long-dated Nominal Treasuries (TLT), European Financials and Cyclicals (EUFN)
Market regime: Chokepoint Stagflation under Fiscal Dominance
The governing market regime remains defined by Chokepoint Stagflation operating underneath heavy fiscal dominance. The binding constraint on this cycle’s primary engine—the artificial intelligence infrastructure build-out—is fundamentally physical. Energized megawatts, specialized transformers, and turbine manufacturing slots are the actual bottlenecks.
Overweight:
Energy and Energy-linked Inflation (XLE, USO), Convex Hedges and Long JPY (FXY, VIXY)
Underweight:
Broad Copper, Grid, and Utility Beta (COPX, XLU), European Squeezed Middle (EWG, EUFN)
Market regime: Chokepoint Stagflation under Fiscal Dominance
The regime is Chokepoint Stagflation under Fiscal Dominance, and the refinement that matters is this: the next repricing originates in credit, not equities. US deficits are large, the AI capex cycle is debt-financed and vendor-circular (hyperscaler 2026 capex of $600–725B exceeds combined free cash flow), core inflation is sticky around 3% on both measures,…
Overweight:
Copper, uranium, energy infrastructure, Agri inputs (phosphate, potash) and grains
Underweight:
Cap-weighted S&P 500 mega-cap beta, Low-quality HY, AI vendor-financed, CRE-exposed
The global economy is operating inside a structural supply-shock regime centered on the effective constriction of the Strait of Hormuz. Crude has repriced roughly 40% year-over-year. US equities have declined only 4–5%. That divergence has a historical resolution, and it does not favor equities.
Overweight:
TIPS and inflation-linked bonds, Agricultural commodities (wheat, corn, soybeans) and non-Gulf fertilizer producers
Underweight:
US large-cap growth and mega-cap tech, European industrials, chemicals, energy-intensive manufacturers
The global macro regime has shifted decisively into a stagflationary supply shock anchored by the physical closure of the Strait of Hormuz. Daily vessel transits have collapsed from 130-plus to low single digits, Lloyd's war-risk premiums have quadrupled, and crude has repriced above $100/bbl. The first-order energy shock is largely in the price.
Overweight:
Cash and T-bills, Agricultural commodities (wheat, corn, soybeans)
Underweight:
European equities and energy-intensive industrials, Broad US passive equity (SPY, QQQ)
The global market regime is governed by a single physical constraint most participants have only partially discounted: the Strait of Hormuz is functionally closed to commercial shipping. Not by military blockade, but by war-risk insurance premiums so severe that transit is economically nonviable for most operators.
Global markets are operating inside a supply-shock stagflationary regime anchored by the near-total closure of the Strait of Hormuz. This is not a transient geopolitical headline. Credible recovery timelines run six to twenty-four months even under optimistic ceasefire assumptions, and the actors with the most leverage over the Strait — Iran's IRGC — are…
Market regime: Supply-Driven Stagflation — Energy Dependency Bifurcation
The effective closure of the Strait of Hormuz following the February 28 US-Israeli strikes that killed Iran's supreme leader has ended the cautious soft-landing consensus and inaugurated a stagflationary regime whose damage distributes along a single axis: energy dependency.
Overweight:
Cash, T-bills, short-duration US IG credit, US dollar / DXY
Underweight:
European equities (industrials, chemicals, consumer discretionary), Global airlines
Market regime: Acute Supply-Shock Stagflation — Early Innings
The effective closure of the Strait of Hormuz has removed roughly 20% of global seaborne crude and LNG from the market with no confirmed reopening timeline. This is the dominant macro event, and it is not yet priced. Oil is up 16% in a week, European TTF natural gas has surged 45-50%, and gold trades near $5,400/oz.
Overweight:
Cash / T-Bills (20-25%), Long Volatility (VIX calls, SPY/QQQ put spreads)
Underweight:
European Equities (STOXX 600), European Gas-Dependent Sectors (utilities, chemicals, industrials, airlines)
The issues connect macroeconomic developments with their concrete implications for markets, asset classes and portfolio allocation.
Equity markets, regions and sectors
The analysis assesses earnings, valuations, market breadth and capital flows, and explains which equity markets or sectors were favoured or avoided in each regime.
Inflation, interest rates and bonds
The issues examine Federal Reserve and ECB policy, bond yields and the term premium, together with their implications for duration, credit risk and equity valuations.
Currencies, gold and commodities
The market outlook explains when currencies, precious metals, energy or agricultural commodities were relevant as return sources, inflation protection or hedges against geopolitical risk.
Portfolio allocation and scenarios
Overweights, underweights, scenario probabilities and observable thresholds show which positioning followed from the assessment and which development would change it.
Questions about the market outlook archive
What does the Leeway market outlook document?
An issue documents the published assessment of the market regime, the implications for stocks, bonds and other asset classes, and the resulting allocation at a specific point in time. It does not assess the quality of an individual company.
Are archived issues changed retrospectively?
No. The archive preserves the view published at the time. Later developments are assessed in a new CIO Perspective rather than written back into an earlier issue.
Why do issues differ in their structure?
The CIO Perspective has evolved over time. Newer issues therefore include additional sections such as scenarios, sample instruments or a signal watchlist, while older issues retain their original structure.
Are the sample instruments an investment recommendation?
No. The sample instruments illustrate the stocks used in the meta market hypothesis to explain an overweight or underweight. They are not a personal recommendation to buy or sell.
General
The information is intended to support you in your independent decision-making in implementing investment strategies and serves purely informational purposes. Past performance is not a reliable indication of future performance. No warranty can be given for the completeness, correctness and accuracy of the listed content. The information does not constitute specific investment recommendations. We neither know you nor your financial situation and do not provide investment advice. Only licensed investment advisors with knowledge of your personal circumstances may do this. PWP Leeway UG (limited liability) is not an investment advisor and does not collect any personal data for the purpose of investment optimization. PWP Leeway UG (limited liability) is a provider of investment recommendations and investment strategy recommendations. As such, it is registered with and supervised by the Federal Financial Supervisory Authority (BaFin). The legal notices on the use of the website and the General Terms and Conditions of PWP Leeway UG (limited liability) also apply.
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Disclosure of interests: To the best of our knowledge, Leeway and the persons responsible for creating or publishing the respective content do not hold a net long or net short position exceeding 0.5% of the issued share capital of any issuer discussed in that content at the time of publication. There are no other interests or business relationships that could conflict with objectivity, unless expressly stated otherwise in the respective content.
