Fidelity sees the Federal Reserve's rate hike cycle potentially starting as late as December, contingent on continued strength in inflation and labor market data. While the possibility of a September move has not been completely ruled out, economic data and geopolitical developments over the next two months could still reignite inflation risks.

More importantly, Fidelity notes that this decision underscores the policy style of the Kevin Warsh era, implying that market expectations for the policy path may shift frequently. This makes interest rates and asset prices more susceptible to fluctuations based on data and official comments, keeping policy and markets in a state of high uncertainty and volatility.

Although recent tensions between the US and Iran have escalated, and investor concerns about AI-related capital expenditure, potential oversupply, and rising long-term bond yields have increased market volatility, Fidelity believes these factors are primarily affecting market sentiment and valuations. They have yet to alter the fundamental trends of the global economy and corporate earnings. Corporate earnings remain solid, with fiscal policy and AI investment continuing to support economic activity. AI remains a key long-term growth theme, and the global economic expansion has not been interrupted, which is still favorable for risk assets in the medium to long term.

In terms of investment strategy, Fidelity maintains an overweight position in equities, favoring Japan and emerging markets where valuations and earnings momentum are more attractive. However, they caution that US large-cap tech stocks are overvalued, and attention must be paid to market concentration and the return on AI investments. On the bond side, inflation, fiscal expansion, and policy uncertainty may limit the downside for long-end yields, leading Fidelity to maintain a neutral stance on government bonds. Meanwhile, given that credit spreads have narrowed significantly, Fidelity remains cautious on credit bonds and suggests investors use a dynamic global multi-asset strategy to navigate the current volatile market environment. The focus should be on high-quality companies, combined with a global dividend strategy and high-quality bond allocations, to seek stable long-term returns.