Skip to content

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.

WHAT ARE THE RISKS?

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

Copyright ©2025. Franklin Templeton. All rights reserved.

This document is intended to be of general interest only. This document should not be construed as individual investment advice or offer or solicitation to buy, sell or hold any shares of fund. The information provided for any individual security mentioned is not a sufficient basis upon which to make an investment decision. Investments involves risks. Value of investments may go up as well as down and past performance is not an indicator or a guarantee of future performance. The investment returns are calculated on NAV to NAV basis, taking into account of reinvestments and capital gain or loss. The investment returns are denominated in stated currency, which may be a foreign currency other than USD and HKD (“other foreign currency”). US/HK dollar-based investors are therefore exposed to fluctuations in the US/HK dollar / other foreign currency exchange rate. Please refer to the offering documents for further details, including the risk factors.

The data, comments, opinions, estimates and other information contained herein may be subject to change without notice. There is no guarantee that an investment product will meet its objective and any forecasts expressed will be realized. Performance may also be affected by currency fluctuations. Reduced liquidity may have a negative impact on the price of the assets. Currency fluctuations may affect the value of overseas investments. Where an investment product invests in emerging markets, the risks can be greater than in developed markets. Where an investment product invests in derivative instruments, this entails specific risks that may increase the risk profile of the investment product. Where an investment product invests in a specific sector or geographical area, the returns may be more volatile than a more diversified investment product. Franklin Templeton accepts no liability whatsoever for any direct or indirect consequential loss arising from use of this document or any comment, opinion or estimate herein. This document may not be reproduced, distributed or published without prior written permission from Franklin Templeton.

Any share class with “(Hedged)” in its name will attempt to hedge the currency risk between the base currency of the Fund and the currency of the share class, although there can be no guarantee that it will be successful in doing so. In some cases, investors may be subject to additional risks.

Please contact your financial advisor if you are in doubt of any information contained herein.

For UCITS funds only: In addition, a summary of investor rights is available from here. The fund(s)/ sub-fund(s) are notified for marketing in various regions under the UCITS Directive. The fund(s)/ sub-fund(s) can terminate such notifications for any share class and/or sub-fund at any time by using the process contained in Article 93a of the UCITS Directive.

For AIFMD funds only: In addition, a summary of investor rights is available from here. The fund(s)/ sub-fund(s) are notified for marketing in various regions under the AIFMD Directive. The fund(s)/ sub-fund(s) can terminate such notifications for any share class and/or sub-fund at any time by using the process contained in Article 32a of the AIFMD Directive.

For the avoidance of doubt, if you make a decision to invest, you will be buying units/shares in the fund(s)/ sub-fund(s) and will not be investing directly in the underlying assets of the fund(s)/ sub-fund(s).

This document is issued by Franklin Templeton Investments (Asia) Limited and has not been reviewed by the Securities and Futures Commission of Hong Kong.

Unless stated otherwise, all information is as of the date stated above. Source: Franklin Templeton.

CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.