Amundi’s Mortier worried about Fed independence, cautious on megacap stocks

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By Yoruk Bahceli

LONDON (Reuters) -Damage to the independence of the U.S. Federal Reserve remains a risk going into 2026, the chief investment officer of Europe’s largest asset manager said on Wednesday. 

Amundi, which manages 2.3 trillion euros ($2.67 trillion), favours European and emerging market bonds and is underweight megacap stocks, according to Vincent Mortier. 

“One of the big tail risks you have for next year is a big pressure put on the Fed,” Mortier told reporters. 

“Any changes in Fed governance or Fed independence could be a massive unexpected thing,” he said, adding he would not be surprised to see a “much lower” Fed policy rate in 2026.

U.S. President Donald Trump has repeatedly attacked Fed Chair Jerome Powell for being too slow to lower rates, despite persistent inflation and steady economic growth. Powell’s term ends in May next year and is expected to be replaced by a candidate whose views align more closely with those of the president.

Mortier said the firm was underweight so-called megacap equities, but it had not sold down the stocks in most portfolios, hedging them with derivatives that give it the option to sell them instead.

Global stocks have come under pressure in recent weeks as concerns mount about AI-related valuations, especially megacaps, a group including the “Magnificent Seven” technology firms.

“To be underweight all these megacap names is very painful this year. We cannot be out of this market, but we are happy to spend some performance of some of the assets to buy insurance,” he said.

The firm expects the U.S. dollar, which has lost over 8% this year against a basket of currencies, to weaken further. Mortier said the benchmark 10-year U.S. Treasury yield would stay anchored around 4%, and expects policymakers to intervene if yields drifted much above here given debt sustainability concerns.

Asked how they might do so, Mortier said the U.S. Treasury could favour issuing shorter-dated debt, rather than longer maturities, and the Fed could resume bond-buying if needed.

Dollar-pegged stablecoins and plans to ease bank capital requirements are also clear strategies to boost demand for Treasuries, he added.

Mortier said he favours positions taking interest rate risk in European bonds, betting the European Central Bank will be “much more dovish” than market expectations that it will keep interest rates on hold next year. 

($1 = 0.8630 euros)

(Reporting by Yoruk Bahceli; Editing by Alun John and Amanda Cooper)