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CONTRIBUTORS

Michael Hasenstab, Ph.D.

Portfolio Manager, Chief Investment Officer, Templeton Global Macro®

Calvin Ho, Ph.D.

Portfolio Manager, Director of Research, Templeton Global Macro

Key takeaways

͏͏͏͏͏͏͏͏͏͏October overview: Politics and uncertainty continued to cast shadows over markets during October. The US government shutdown continued throughout the month, with a number of data releases delayed as a result. In Europe, news out of France—the resignation (and subsequent reappointment) of the prime minister and a credit ratings downgrade—meant concerns over the fiscal situation in one of the European Union (EU)’s biggest economies remained center stage. Japan elected a new prime minister, who sought to assuage market concerns about prior comments related to preferring a weaker currency. China released its latest five-year plan, with various elements aimed at the country reaching a per-capita income level on par with mid-level developed countries in a decade. The United States and various Asian countries reached agreement on tariff packages. Growth-related releases remain relatively resilient even as risks remain elevated, partly due to tariffs. Inflation data in developed economies generally confirmed some pricing pressures were returning, but they remain more contained among a variety of emerging markets (EMs). The US Federal Reserve (Fed) cut interest rates again in October, though most central banks (many of which had been cutting rates during the Fed’s extended pause earlier in 2025) remained on hold. The US dollar (USD) was stronger overall in October, appreciating against most developed market currencies while having mixed performance against EM currencies. Bond yields fell in most countries during October, and EM sovereign credit was generally stronger.

Outlook: We see the global economy as undergoing a period of “global rewiring” on a number of fronts—evolving patterns and relationships that we anticipate affecting certain economies and markets for some time to come. Such rewiring could cover relationships between countries or developments within particular regions or economies. Our core themes of improving EM fundamentals, USD weakening and geopolitically induced shifts in global supply chains remain intact, with recent events providing further support to our views. Uncertainty remains elevated. Final tariff levels are still not decided for a number of countries. Risks from US tariff and trade policy encompass growth, inflation and/or geopolitical implications and vary by country. Domestic political developments in some countries raise fiscal and other policy concerns. Finally, the current lack of US data as the government shutdown continues and questions over the independence of traditionally non-partisan government institutions further increase uncertainty.

Continue reading further by downloading the PDF, which highlights the Templeton Global Macro team’s market and economic overview, and outlook for the month.

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All investments involve risks, including possible loss of principal. Past performance is no guarantee of future results. Please note that an investor cannot invest directly in an index. Unmanaged index returns do not reflect any fees, expenses or sales charges.

Fixed income securities involve interest rate, credit, inflation and reinvestment risks, and possible loss of principal. As interest rates rise, the value of fixed income securities falls. Low-rated, high-yield bonds are subject to greater price volatility, illiquidity and possibility of default.

Sovereign debt securities are subject to various risks in addition to those relating to debt securities and foreign securities generally, including, but not limited to, the risk that a governmental entity may be unwilling or unable to pay interest and repay principal on its sovereign debt.

Changes in the credit rating of a bond, or in the credit rating or financial strength of a bond’s issuer, insurer or guarantor, may affect the bond’s value.

International investments are subject to special risks, including currency fluctuations and social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets. Investments in companies in a specific country or region may experience greater volatility than those that are more broadly diversified geographically. The government’s participation in the economy is still high and, therefore, investments in China will be subject to larger regulatory risk levels compared to many other countries.

Currency management strategies could result in losses to the fund if currencies do not perform as expected.

Concentrations of certain securities, regions or industries is subject to increased volatility. Investment strategies incorporating the identification of thematic investment opportunities, and their performance, may be negatively impacted if the investment manager does not correctly identify such opportunities or if the theme develops in an unexpected manner.

Diversification does not guarantee a profit or protect against a loss.

WF: 7409008

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