An Evaluation Zero Equilibrium's Calls on Broad Asset Classes and Q4 Adjusted Calls.
By Chinedu Okoye
Intro:
As at the end of last year, I released a paper on ZE's Financial Markets Outlook Per Asset Class for 2025. This outlook featured five asset classes; Commodities; Equity (Indexes); Cryptocurrency; and; Fixed Income Sovereigns [Bonds].
The calls and expectations for select assets on our watchlist and/or portfolio are presented below together with the outcome for a three-quarter(s) year review (¾ FY2025).
1. Equities:
ZE's position per the 2025 Outlook was that “Equities stand out as the most promising—or at least stable—asset class...”. expecting it to be the least volatile or most stable, with potential for decent upsides.
The VIX chart below confirms this position this far as the index dipped -21.48% to 16.3 showing low volatility on a year-on-year basis, as US and other country equities rose.
Though some volatility was seen around April, (owing mostly to trade tensions), and sectoral segments mixed, overall indexes on the ZE watchlist did infact stabilize and made significant gains.
The Nikkei, Dow Jones, posting all-time highs, and the S&P rose 17%± year-on-year. The Japanese stock index is up 23.58% from last October, to date at 48,504 as at the time of this write-up.
The rally was not lost on European indexes with the Euro Stoxx 50, DAX, and FTSE 100,also posting significant gains within the range of 12% - 15%.
Year-on-Year European and UK Major Indexes on ZE Watchlist:
DAX: +28.44%
FTSE 100: +15.32%
Euro Stoxx 50: +13.90%
2. Commodities: Commodties on our watchlist as at the time of the outlook were; Gold, Silver, and Crude Oil.
Calls:
We anticipated a full year target of no lesser than $3,300/oz for H1, and $3,600/oz for FY 2025 for Gold, $45 for Silver, and $75 and $70, for BRENT and WTI (US) Crude respectively.
Weaker economic numbers, we stated, would be bullish for gold, as safety appeal attracts investors.
Both metals have since surpassed those targets, which led us to take profits and adjust new targets taking new long positions, to yield an extra 11% and 8.4% price appreciation for Gold and respectively.
Crude has been suppressed by supply and demand factors, as OPEC+ increased supply, and industrial consumer weakness weighed on China demand, along with the heavily discounted Russian Crude Beijing and India exploited.
With the US consumer maxed out, consumer demand has slowed, taking refinery utilization down 200+ basis points (>2%), as US inventory builds, or holds steadily high.
Unexpected USD strength in the second half of the year also added to consumer and producer demand weakness, factors bears capitalized on. Thus, contrary to our expectations, BRENT and US crude dipped -15.36% and -16.32% respectively.
ZE calls missed by significant amounts on crude. However expectations for the commodity sub-segments portfolio (Gold, Silver and Crude) were up and not too far from aggregated targets.
This wasn't totally ruled out as the outlook opined that: “this market segment is expected to be dependent on Consumer spending patterns, but muted by a strong dollar where aggregate demand doesn't change drastically.” This explains the miss in our targets.
The total aggregated return expected from our commodity watchlist/portfolio allocation for Gold, silver and Crude was 15.83%, however the actual performance as at today October, 9, 2025 on a year-on-year basis is approximately 27%.
The gold and silver outperformance over compensated for the crude oil decline or negative returns.
3. Crypto: Our calls for crypto was mixed on direction and definitive in price behavior. Our position on was that; ”the crypto market appears —in our opinion—poised for a rebound, with Bitcoin likely to lead a renewed bull cycle once the prevailing uncertainty abates.”
Our holdings/watchlist were in three subcategories: volatile high-yielding coins (BTC, BCH, ETH); stable low-yielding coins (USDC) for Naira hedges and store of value on take-profit actions, on temporary pullbacks, and; Gold-backed coins providing a hedge and exposure to our expected gold upside.
Year-on-year Performance This far;
BTC: ~+96%
BCH: ~+80.3%
ETH: ~+83%
USDC: dipped v the Naira, even on Broad dollar strength a giant peers on wider EM currency stability. Ar 0.9997 USDC is down -0.04% , however the USD/NGN pair (the relevant metric to the currency hedge objective), is down -12.5%.
Gold Coins:
This segment lived up to it's bidding with both coins mirroring the price movements of the yellow metal it's backed by – Gold. Both PAXG and XAUT are up ~49% Year-on-Year.
4. Fixed Income Sovereigns:
For fixed income Sovereign bonds, our call was divided in two; (i) DM sovereigns, and; (ii) EM sovereigns.
We highlighted uneven risks amongst country groups, with the former (DM) with price appreciation potential, and the latter (EM), higher yields and relative stability, and carrying the best risk-reward balance.
Thus far, our proxy assets SPDR® Bloomberg Emerging Market Bond ETF is up and US 10 Treasury yields lower reflecting price appreciation in EM sovereigns (see chart below)
Conclusion: Reconciling Outlook Calls with Real Market Performance at the end of Q3:
In light of the above, the following summarizs out how ZE watchlist performed so far in the year– an adjudgement of Zero Equilibrium Chief Economist Chinedu Okoye.
• 2025 has validated ZE’s strategic and diversified conviction across low-volatility equities, defensive commodities, and opportunistic crypto exposure.
• The primary shortfall, crude oil, was offset by exceptional gains in precious metals and digital assets, as Gold and crypto generated outsized alpha.
• Portfolio-level aggregate returns outperformed targets due to metals and digital assets’ strength.
• EM currency stability, fueled initially carry trades, and now by desires and attempts to lock in high-yields. Stocks bonds and currencies have stabilized on aggregate in the EM space.
The outperformamce above leads us to a much warranted adjusted Outlook for the final quarter of the year on price targets and broad directional movements.
Calls for Q4 2025 and Adjusted Dull Year Targets:
As the year rounds out, ZE positioning remains moderately risk-on but valuation-aware, with rebalancing expected in Q4 to lock in high-beta profits, as explained (per asset class) below:
Equities:
Further returns on the equities (indexes) segment would be greatly impacted by interest rate decisions and Federal Reserve monetary policy guidance, inflation is expected to take the front seat at the FOMC, given that jobs market performance however tepid, still hovers around ful employment levels.
With the US economy closer to its full employment target and 90 basis points away from its 2% inflation target, the Fed is unlikely to go below the anticipated extra 50bps Fed funds rate cut priced in by the markets.
Because banking liquidity are starting to feel the strain of the quantitative tightening, as shown by falling bank reserves below $3 trillion, and because we expect the Fed to stay hawkish on guidance, we do not forsee a massive leap in major US equity indexes.
European stocks however are set to outperform US majors, with concerns on fiscal concerns out of France, pushing investors to hedged equity positions, trading action is set to catalyse the momentum rather than investment (long-term holdings), stalling German output growth, and renewed trade uncertaities.
Commodities:
We forsee a marginal slowdown in the momentum of precious Metals (gold and silver), with less chances of a significant retracement.
Adjusted Price Target for the above commodities for Q4 ending:
• Gold: $4,185
• Silver: $50.65
• Crude: BRENT WTI AVERAGE
Resistance-> $68.50 $63.90 $66.20
Support-->. $66.75 $61.85 $64.30
Support is also the expected Lower band, and Resistance, the Upper-bound Range we expect these crude to remain rangebound between these levels throughout Q4.
Crypto:
We expect the above ‘volatile’ cryptos (BCH, BTC, ETH) to close out he year as strong as it has been, but with a capped average return of 5% in either direction at the end of Q4/ Q1 2025.
Fixed Income:
• We expect DM sovereigns to pick up steam on Q4 2025/ Q1 2026 as investors look for safety and yields which are currently decent.
• EM sovereigns are expected to be marginal depending on exchange stability for further strength of local currencies could cap growth in investment flows. Ultimately we expect a sustained momentum in stocks and bonds.
• High yield spreads (difference between yields on corporate debt and sovereign debt) could wide overall, but narrow acyclical sectors.
Note: All returns are year-on-year to Oct 9, 2025.
Data Sources:
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