Sleeping beauty

Tepid demand at the 20-year U.S. Treasury auction, the loss of Moody’s top credit rating, 30-year bond yields surpassing 5.1%, and ongoing political turmoil are casting fresh doubts on U.S. exceptionalism and weighing on investor sentiment toward U.S. equities.

In contrast, European equities are beginning to stand out. Trading at a record valuation discount to their U.S. counterparts, they are becoming an increasingly attractive option for global asset allocators. The disruptive Trump 2.0 presidency is also prompting European leaders to act—finally addressing long-overdue infrastructure and defence investments. Germany, after years of fiscal restraint, exemplifies this policy shift.

While Europe still faces structural challenges and reforms will take time, the region resembles a long-overlooked sleeping beauty—perhaps finally ready to awaken.