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The Middle East deal is in reach – ​Key opinion changes
Edmund Shing, Global Chief Investment Officer, BNP Paribas Wealth Management and Guy Ertz, Deputy Global CIO, BNP Paribas Wealth Management
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Key Messages

1. Middle East Deal Reached: The US and Iran have reached a peace deal, set for signing in Switzerland, which is expected to boost risk appetite and reduce geopolitical tensions

2 .Central Banks and Forex: The Fed and the ECB are expected to maintain a data-dependent approach, with no further rate hikes anticipated in 2026. EUR/USD target is still 1.20 over 12 months.

3. Oil Price Outlook: Brent crude prices are expected to stabilize in the USD 80–90 range in the short term, supporting the assumption of peaking inflation in 2026 and a decline in 2027. The long-term outlook remains negative with USD 70–80 target trading range for Brent price.

4. Upgrade high yield bonds from Negative to Neutral: The outlook has improved after a deal to end the conflict was announced, significantly reducing recession concerns. However, the expected return remains limited as risk premiums stay near historical lows.

5. Equities Repositioning Amid Geopolitical Shifts: We upgrade Japan from Neutral to Overweight. We upgrade South and South-East Asia from Underweight to Neutral while remaining Neutral on Emerging Markets. European equities are upgraded from Underweight to Neutral. Sector wise: we upgrade European Travel & Leisure, Automobiles, and Media to Neutral. We upgrade European Banks to Overweight and US Financials from Underweight to Neutral.

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