“Yes, we are optimistic. The Fed rate cuts are going to be underpinning a soft landing scenario in our view, that is our base case,” said Yap. “We’ve got a 60% probability of soft landing in the U.S. We expect one more rate cut from the Fed this year and another three cuts next year, that will bring us down to 3% on the Fed funds rate by the end of next year.”
According to Yap, such a setup historically bodes well for markets. “If you avoid a recession in a Fed cut scenario, our markets tend to do well,” he added. The ongoing earnings season, he noted, has also provided tailwinds, with 2025 earnings consensus inching higher to 11.5–11.6% from below 11% earlier. The following year could see further acceleration to around 14%, reinforcing a positive fundamental outlook.
While Yap acknowledged risks from inflation surprises or renewed trade tensions, he maintained that the overall setup remains constructive. “We do have a 20% probability of a recession and in which case things will not be looking so good,” he cautioned. “Labour market weakness is something we are watching very closely. But it is exactly because of the labour market weakness that we see the Fed being able to respond and cut rates. We are constructive towards the year-end and over the next 6–12 months.”
Gold and Equities Take Center Stage
Amid the evolving macro landscape, Yap remains bullish on both gold and equities.
“Yes, we continue to like gold structurally and we do see the pullback as a buying opportunity. We have our 12-month target at 4,500,” he said. “We see ongoing demand for diversification that will be strong not just from central banks, but also from investors aware of the importance of having gold as a diversification asset.”Yap added that his firm is “overweight on gold along with global equities” while maintaining an underweight stance on credit. “We think that the spreads are really just too tight to warrant the risk. You can get most of the fixed income from owning your sovereign bonds rather than taking on credit risk,” he explained.Regional Outlook: China Favoured, India Core Allocation
On the regional front, Yap highlighted China as his top pick within Asia ex-Japan, citing improved valuations and policy support.
“Within Asia ex-Japan, our preferred market is China,” he said. “India continues to look very good on a medium-term, longer-term view, but the earnings are still looking negative. We’ve seen a lot of fiscal support and tax cuts that could be positive for some of the consumer discretionary sector and the financial sector.”
Despite the optimism, Yap suggested that broader earnings recovery in India is needed before turning fully positive. “India is a core allocation for us at the moment within Asia ex-Japan,” he concluded.
As global investors navigate through shifting monetary policies and geopolitical uncertainties, Yap’s “glass half full” perspective underlines a cautiously optimistic stance — one that sees opportunity in gold, equities, and selective Asian exposure, anchored by the belief that the Fed’s easing cycle can steer the global economy towards stability without a hard landing.