There are always upside and downside risks to the outlook. Below are five things we are watching going into 2026.
1. The US economy starts re-accelerating because of the fading trade war shock and the One Big Beautiful Bill, and inflation begins to move higher from an already high level.
2. The global industrial renaissance boosts global growth with more and more countries focusing on homeshoring advanced manufacturing capacity, investing in infrastructure, energy, defense and supply chains.
3. The new Fed Chair lowers interest rates purely for political reasons.
4. AI bubble bursting results in a major correction of Mag 7 equity prices and slows capex spending and high-end consumer spending.
5. Dramatic increase in the supply of fixed income in 2026, coming from growing government deficits and hyperscaler issuance, puts upward pressure on rates and credit spreads.
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