Our PGIM team recently attended the annual meetings in Washington, D.C. The overall feel was of relief, but with a dose of unease because things are better than feared, but not as good as they could be. U.S. macro and markets remain exceptional, but policy uncertainty undermines confidence. There is fear of sticky U.S. inflation and fiscal addiction and reliance on tariff revenues.

Fed policies, independence, and mandate were in focus, as was deregulation. Easy financial conditions fuel markets, but there is some inconsistent valuations on the equity and rates side. And there is already an emerging AI bubble watch. EM optimism picked up further, and EM policies are seen as more active and more cautious. But trade conflict will continue with uncertain long term effects, and U.S.-China decoupling is not going to be so easy.

Flare-ups are likely, but both sides will calibrate negotiation levers. In this environment. EMs will prefer strategic optionality, not siding with any of the sides. Also interestingly, AI and stablecoins are now key macro and investment themes, not just tech themes. And frontier focus is still there, but investors are a bit more selective.