Creand Asset Management sees complacency in the markets and strengthens its focus on quality credit

• The asset manager believes that the market has already priced in part of the initial noise around tariffs, but warns that their full impact has yet to fade. If the ongoing legal proceedings were to result in reversals, this could act as a positive catalyst

• Creand AM expects companies linked to AI to maintain their momentum for as long as there is no upward shift in interest rates. However, it cautions that the high levels of investment associated with AI could put pressure on margins.

• In fixed income, Creand AM favours high-quality corporate credit and extending duration in the United States, where it sees attractive yields and greater visibility on interest rates.

Creand Asset Management, the asset management arm of the Creand Group in Spain, believes that the markets are going through a phase of clear complacency, with an interpretation of the economic environment that fails to fully reflect the risks present in the macroeconomic backdrop. Although inflation remains at elevated levels and geopolitical tensions and trade uncertainty persist, equity indices continue to display a positive tone, supported by abundant liquidity and valuations that remain demanding.

In this context, Creand Asset Management notes that episodes which, at other times, would have generated volatility — such as the recent shutdown of the US federal government — have had a very limited impact. Indeed, the firm recalls that in nine of the last ten government shutdowns, the S&P 500 has risen in the following three months, reinforcing the idea that the market is operating in a “who cares” mode that allows structural risks to be largely overlooked.

Luis Buceta, General Manager of Business and Investments, notes that “the market is showing excessive optimism at a time when there are still significant risk factors in play. For this reason, we believe it is necessary to maintain a prudent and selective approach, focused on quality assets and companies with robust business models”.

Monetary policy: a more cautious Fed

In recent weeks, the Federal Reserve has cooled expectations of rate cuts in 2026 in order to preserve room for manoeuvre while the US labour market continues to show signs of slight weakening. In this context, Creand Asset Management believes that interest rates could end up closer to 3% than to 4% by the end of next year, provided inflation continues its downward trend.

Regarding the new tariff environment, the firm notes that the market has already priced in much of the initial noise, although its impact has not yet fully dissipated. In some sectors, the effect is proving more gradual than anticipated, which explains the muted reaction of the indices. Even so, the asset manager believes this will remain a factor to watch over the coming quarters, particularly if the ongoing legal proceedings move towards possible reversals, which would act as an additional positive catalyst for the markets.

Miguel Ángel Rico, Chief Investment Officer at Creand Asset Management, adds that “although tariffs have faded from the centre of the financial debate, their effects are visible in certain margins and supply chains. It is reasonable to expect them to continue exerting an influence, albeit more gradually than in previous cycles”.

Equities: continued momentum in AI

Creand Asset Management believes that, as long as there is no upward shift in interest rates, it is reasonable to expect the momentum of companies linked to Artificial Intelligence to continue. The firm observes a kind of “circular economy” dynamic, in which capital circulates among companies closely connected to AI. It also notes that significant constraints on energy capacity do not appear likely, as major technology companies are signing very long-term supply contracts to secure their future needs. However, the asset manager warns that the high levels of investment associated with AI could put pressure on margins in the coming quarters, although it stresses that the current environment still favours the best-positioned companies. It considers it inevitable that margins among the large technology players will decline, given the challenge of generating returns on such substantial investments.

From a geographical perspective, the firm highlights that average earnings-per-share (EPS) growth in the United States is running above 10% year-on-year, exceeding expectations from only a few months ago. Creand Asset Management points to excess liquidity and a market that remains in “complacency” mode, which can lead to elevated valuations.

Meanwhile, in Europe, although earnings are not expected to be as strong, positive surprises could emerge if business sentiment improves and translates into stronger economic growth. If the US dollar stops weakening, European companies may finally see an upswing in their earnings. With valuations in the region at reasonable levels, this could create an attractive opportunity.

Emerging market equities also continue to look appealing. Major emerging stock markets appear to be gaining traction again after several challenging years. The growth differential between emerging and developed economies (the key driver in this space) is starting to widen once more. Emerging economies are performing well, and indicators of economic activity, such as PMIs, are rising. Historically, there has been a strong correlation between GDP growth differentials and relative equity returns.

Fixed income: quality credit and duration in the US

In the fixed income space, Creand Asset Management notes that investors are becoming more cautious in the current market environment, with outflows both from AAA-rated collateralised loan obligations (CLOs) and from US dollar high yield. Creand Asset Management maintains a constructive stance on high-quality corporate credit, where it sees fewer risks, supported by ample liquidity and attractive carry. It highlights that default rates continue to decline in both the US and the eurozone, and that the primary market remains very active, with some of the largest euro-denominated issues since 2023.

In this environment, the firm considers it reasonable to extend duration towards the 7–10-year segment in US fixed income, where it sees attractive yields and greater visibility on interest rates. “In this scenario, locking in a good level of yield at medium and long maturities is a strategy that aligns with a more stable monetary cycle, while also providing protection in a market that remains highly liquid”, says Miguel Ángel Rico, Chief Investment Officer at Creand Asset Management.

As for commodities, the firm notes that gold retains upside potential in an environment where liquidity remains abundant and geopolitical risks persist. In the case of oil, the market is in a surplus, amplified by the growth of Liquefied Natural Gas (LNG), which reduces additional pressure on prices.