Can the Bull Run Last? Why Low Rates, AI, and Liquidity Point to More Gains in Q4 2025

As 2025 heads into its final months, markets are navigating a complex mix of macroeconomic forces, policy shifts and sector-specific rallies. Investors are weighing inflation, central bank moves and geopolitical uncertainties, while corporate earnings, AI and technology investments, and alternative assets continue to reshape opportunities. As with every quarter, Swissquote’s Ipek Ozkardeskaya speaks with NFG Partners’ Glenn Coxon to identify the highest-conviction trades that could capture both growth and protection in this dynamic environment — from weak-dollar, emerging market equities to commodities, energy and cryptocurrencies.

The third quarter was noticeably calmer than the first two — though it’s hard to tell whether markets genuinely settled or investors simply grew accustomed to the Trump-linked volatility. In tangible terms, uncertainty eased as trade deals emerged and global economic outlooks improved. In the US, inflation didn’t accelerate as much as feared, while the jobs market began showing early signs of a slowdown. In Europe, investors shrugged off trade worries, while in China, the AI rally started gathering strong momentum.

On the policy front, the most notable change was in Federal Reserve (Fed) expectations. Fed officials penciled in two more rate cuts before the end of the year, and their median forecast hinted at one additional cut in 2026 — though views remain widely divergent. Some policymakers anticipate multiple cuts, while others signal the possibility of a hike, reflecting ongoing uncertainty over growth and inflation dynamics.

Glenn Coxon from NFG Partners emphasizes that the combination of easier monetary policy and ample fiscal support is fundamentally bullish for equities. He notes that developed nations — led by the US — are focused on boosting growth to reduce debt-to-GDP ratios. And if growth targets falter, central banks and governments may allow inflation to rise, effectively eroding real debt levels.

Coxon even argues that the Fed is behaving as if its inflation target has shifted from 2% to 3%!

This means that the Fed’s policy easing may continue for some time!

The impact is visible across the yield curve. Short-term US yields have been pressured lower by the Fed’s dovish stance, while long-term yields are creeping higher under the weight of ballooning government debt and rising long-term inflation expectations. This steepening curve may be uncomfortable for traditional bond traders, but it sets the stage for a potential round of quantitative easing (QE), where the Fed would buy government bonds to keep long-term borrowing costs in check. For risk investors, such a move would be a cherry on top!

As we move into the final quarter of 2025, the broader market context is supportive and, in many ways, surprising given the volatility earlier in the year.

In Q2, the S&P 500’s earnings growth came in at an impressive 13% — roughly double what analysts had been expecting — highlighting the resilience of corporate America even amid geopolitical tensions, inflationary pressures and lingering uncertainty over trade policies. Beyond the headline numbers, companies across multiple sectors, from technology and industrials to consumer staples, reported better-than-expected margins, reflecting both cost efficiencies and strong pricing power. Profit outlooks for major caps also improved over the summer, signaling that corporate management teams are increasingly confident in demand trends, supply chain stability and the broader macroeconomic environment.

Against this encouraging earnings backdrop, the Fed’s September rate cut takes on heightened significance. The Fed decided to move forward as ‘insurance’ to weakening jobs market, but the fresh easing cycle begins at a time when growth forecasts have been revised upward, effectively reinforcing a supportive environment for equities.

Investors now face a unique scenario: strong corporate performance combined with easier financial conditions, lower borrowing cost and ample liquidity.

This mix is particularly favourable for risk assets, as it reduces the immediate pressure on earnings while providing a tailwind for investment, mergers and share buybacks. The convergence of strong fundamentals and accommodative policy creates a landscape where equities are well-positioned to absorb shocks, sustain momentum and potentially reach new highs in the months ahead.

Glenn Coxon argues that the Fed didn’t strictly need to cut rates, given the reflationary and stimulus-heavy environment in the US. Yet, he sees the cocktail of loose monetary and fiscal policy as highly supportive for markets. Higher inflation, in his view, encourages households to invest, protecting their wealth from erosion and fueling further demand across equities and other risk assets.

In short, the conditions are set for markets to benefit from a combination of policy easing, fiscal support and robust corporate profits — a dynamic that may sustain risk appetite well into the remainder of the year.

A potentially overheating economy, combined with lower interest rates, creates a fundamentally supportive backdrop for stock markets.

When borrowing costs fall, companies — particularly growth-oriented firms — benefit from cheaper capital, which can fuel investment in innovation, expansion and acquisitions. For growth stocks, which often carry higher valuations and depend on future earnings, the impact of falling interest rates is especially pronounced: lower discount rates increase the present value of expected cash flows, making these equities more attractive to investors.

Despite sky-high valuations, the combination of easier monetary policy and persistent inflationary pressures may lure some institutional investors back into the market. These conditions create a scenario where the opportunity cost of holding cash or fixed-income instruments rises, encouraging allocations toward equities to preserve real returns.

In particular, US growth-heavy indices like Nasdaq may benefit from renewed inflows, especially given the depth of net speculative short positions. With many market participants positioned defensively, there is room for further capital to rotate into equities, potentially amplifying gains.

Moreover, the interplay between policy easing and strong corporate earnings provides a psychological boost for investors, reinforcing confidence that equities can continue to generate outsized returns even in a complex macroeconomic environment.

The cocktail of low rates, manageable inflation and structural growth trends underpins the bull case for risk assets.

This suggests that growth stocks remain well-positioned to outperform across the coming quarters.

In a single word, ‘bullish’ sums up Coxon’s view for the final quarter of an eventful year.

Who would’ve thought!

The current global setup remains supportive for both European and emerging market (EM) equities, as well. European stocks have benefited from a combination of looser monetary and fiscal policies, alongside a strong rally in European defense names this year. Add to that the euro’s significant appreciation and investors in European equities have enjoyed a satisfactory performance, reinforcing a positive outlook for the region. As Glenn Coxon notes, the fundamentals for European equities remain intact, suggesting further upside potential.

For EMs, bullish signals are less frequent, says Coxon, but the environment is currently favourable. A weaker US dollar is one of the key supportive factors for EM equities, alongside attractive valuation gaps compared with developed markets. This dynamic has underpinned rallies, such as the gradual momentum seen in Chinese technology stocks, which are now regaining investor attention.

Bullish sentiment is not confined to equities alone. The current macro setup — featuring accommodative policy, abundant liquidity and the potential for an overheating US economy — also creates a fertile environment for alternative assets. Precious metals, hard commodities and even cryptocurrencies are benefiting from these conditions, offering investors multiple avenues to capitalize on the broader market tailwinds.

The US dollar has been on a depreciating trend since the start of the year, weighed down by factors such as the trade war, waning US exceptionalism, rising concerns over US debt and sustained outflows from Treasury holdings.

While net speculative positions remain deeply short, Glenn Coxon argues that the US dollar is not positioned for a meaningful rebound in the coming months. And over the longer term, the consensus points to a gradually softer dollar as structural pressures continue to mount.

None of the major currencies look particularly attractive right now.

According to Coxon, most are grappling with structurally higher inflation and ballooning debt, which in turn lead to low or even negative real yields. If one were to rank the majors from worst to “less worse,” the US dollar would occupy the top spot, followed by sterling, the euro, and the Swiss franc.

In terms of central bank policies, Coxon believes that the European Central Bank (ECB) and the Bank of England (BoE) are most likely done with rate cuts this year, but for very different reasons. The ECB sees economic growth and inflation at levels that justify keeping rates near 2%, while in the UK, rising inflationary pressures will prevent the BoE from providing further support despite sluggish growth and ongoing budget concerns.

Among the majors, the Swiss franc arguably remains the strongest, despite zero interest rates and the lingering threat of negative policy rates. Even so, the Swiss National Bank (SNB) is reluctant to allow the franc to appreciate too sharply, aiming to shield exporters who have already been hit hard by the US’ 39% tariffs. The franc appetite, though harmful to exports, underscores the currency’s role as a safe-haven currency in a challenging global environment.

The current environment of low to negative real yields is strongly supportive of precious metals, hard commodities and cryptocurrencies, says Glenn Coxon.

Gold, in particular, benefits not only from the accommodative monetary backdrop but also from ongoing political and geopolitical uncertainties, as well as rising demand from central banks around the world. These factors together create a compelling case for continued upside in the sector.

Looking at historical patterns, previous gold rallies have delivered gains of 3x and even 6.5x over their cycles in early 70s and post-2000. By contrast, the current gold rally has been unusually slow, suggesting there may still be significant room to run. Coxon notes that if history is any guide, and we assume a potential 7x increase this time, we could currently be only at the mid-range of the developing rally. Under such a scenario, gold prices could theoretically reach as high as $7’000 per ounce before the rally fully matures and peaks.
 

This combination of structural monetary support, safe-haven demand and historical precedent makes precious metals — and gold in particular — an increasingly attractive option for investors seeking protection against inflation, currency volatility and global economic uncertainty.

We are currently in a reflationary market setup, and crude oil stands out as the one major asset that hasn’t followed the script, Coxon points out. Typically, when the global economy is in reflation mode — marked by stronger growth expectations, improving demand from emerging markets and a weaker US dollar — commodities, and especially oil, tend to push higher. As such, bullish conditions are largely in place: the dollar has been retreating, making dollar-denominated commodities more affordable worldwide; emerging market growth prospects have brightened, suggesting stronger demand for energy; and geopolitical tensions in key producing regions continue to offer a supportive backdrop. Yet despite this alignment of factors, US crude prices have consistently struggled to break out of the $60–65 per barrel range, leaving many investors frustrated by oil’s apparent inertia.

But the lack of headline price momentum doesn’t mean there are no opportunities in the market.

Oil futures remain in a state of backwardation, where shorter-dated contracts trade at higher prices than those further out on the curve.

For investors, this structure is meaningful: when rolling futures positions forward — selling the expiring contract and buying the next one — they are effectively moving into a cheaper contract. This creates what’s known as a positive roll yield or positive carry. It means that even if spot prices remain locked in the current range, long futures positions can still deliver attractive returns simply because of the curve’s shape.

In practical terms, backwardation rewards those who stay long and continuously roll their contracts, while punishing short positions that have to roll into more expensive contracts. That dynamic helps explain why crude futures remain profitable despite the underlying commodity appearing rangebound. In other words, the headline price may not be telling the full story — oil is still a winning trade, not because it is breaking higher, but because the market structure itself is working in favour of the bulls.

Glenn Coxon and team are bullish for oil, copper and energy stocks. Remember, energy stocks also benefit from AI and technology demand, and their dividends are attractive for hedging against inflation.

Beyond precious metals and hard commodities, cryptocurrencies are increasingly well positioned to benefit from higher inflation, low or negative real yields and the ongoing deterioration of traditional currency valuations. For the first time, Glenn Coxon and his team are taking concrete action, opening a long position in Bitcoin as part of a broader strategy to hedge against currency risk and preserve purchasing power.

In the short term, Coxon notes, crowded long positions and inherent market volatility could lead to intermittent corrections or sharp swings in price.

Yet, despite these fluctuations, Bitcoin remains a high-conviction trade for the team’s long-term investment approach. With limited supply, growing institutional adoption and continued macroeconomic pressures, Coxon sees Bitcoin as a compelling asset for portfolio diversification and inflation protection.

While short-term turbulence is likely, the longer-term potential for substantial gains makes entering now an opportunity worth seizing.

The content in this article is provided for educational purposes only. It does not constitute investment advice, financial recommendations, or promotional material.
Investing in digital assets carries a high degree of risk.