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From 2026, gradual U.S. fiscal stimulus and corporate adaptation to policy uncertainty should help reduce the risk of a U.S. consumption slowdown. Global trade excluding the U.S. stays relatively strong, while disinflation outside the U.S. supports real incomes and underpins consumer demand, with growth remaining positive in all major economic regions. Together, these factors mean most advanced economies grow around trend and create a broadly supportive backdrop for global markets, with central banks largely comfortable keeping rates low.
In the U.S.: Growth resilient at 2.1%, inflation at 3% amid data uncertainty
U.S. growth data are still noisy, but upcoming releases should clarify momentum into 4Q, where activity likely accelerates even as concerns about the outlook persist. If November labor data confirm a slowdown or contraction in job growth, further Fed rate cuts are likely. Inflation looks softer than expected despite tariffs, with core goods prices pushed up by tariffs while shelter costs continue to decelerate. Data gaps (e.g., a possible missing October CPI) and a potential rollback of tariff authority ahead of elections add to uncertainty around the inflation path.
In Europe: Moderate growth at 1.4%, 2.1% inflation, and stable ECB rates
Eurozone growth is expected to stay above 1% in 2026, supported by a supportive policy mix in Germany and a stabilizing manufacturing sector, with GDP growth around 1.1%. Labor markets, consumer savings, low corporate leverage, and clearer trade prospects underpin further growth. Inflation is projected to be below 2% through 2026, helped by lower energy prices, a stronger euro, moderating wage growth, and productivity gains. The ECB is likely to keep rates near 2%, with risks tilted towards further cuts.
In China: Sustained growth at 4.8% with no inflation and targeted policy easing
GDP growth is expected to slow modestly to about 4.8% in 2026 from 5% in 2025, with softer momentum in 1H and firmer activity in 2H, while consumption, investment, and exports remain positive. The Xi-Trump meeting reduced tariff tensions, including a lower effective U.S. tariff rate and resumed commodity flows. Policy support should cushion the slowdown through continued but measured monetary easing and a new Five-Year Plan focused on technology and energy autonomy. Inflation remains very subdued, with CPI only slightly above zero.
Equity: Global equities were flat on average in November. The S&P 500 and Euro Stoxx 50 were broadly flat MTD but remain up 16.4% and 15.8% YTD, while the Nasdaq 100 dipped 1.6% MTD, yet is still up 21.0% YTD. Japan and Korea saw sharper pullbacks, with the Nikkei 225 down 4.1% and Kospi 200 down 4.4%, though they lead globally at 26.0% and 74.3% YTD. China and India diverged: Hang Seng China Enterprises and Hang Seng Tech fell slightly, while India’s NIFTY 50 gained 1.9%. Volatility eased, with the VIX at 16.4 and lower both MTD and YTD, keeping risk sentiment broadly constructive.
Fixed income: The 10-year U.S. Treasury yield is currently 4.02%, down 6bps MTD and 56bps YTD, signalling a further easing in U.S. rate expectations. In Europe, the 10-year Bund yield is now 2.69% (+6bps MTD, +32bps YTD), while China’s 10-year is 1.85% (+9bps MTD, +15bps YTD).
Currencies: EURUSD trades at 1.16, up 0.5% MTD and 11.4% YTD, while USDJPY at 156.15 is 1.4% higher MTD but little changed YTD (-0.4%) close to its 40-year high. USDRMB is 7.07, down 0.7% MTD and 3.3% YTD, signalling RMB appreciation, while AUDUSD at 0.6547 is marginally higher MTD (+0.1%) and up 5.3% YTD.
Commodities: Oil is trading at USD 58.55, down 4.0% MTD and 18.4% YTD, reflecting ongoing pressure from weaker demand expectations. Gold stands at USD 4,218, up 5.9% MTD and 60.4% YTD, while copper at USD 11,432 has gained 2.4% MTD and 30.1% YTD, highlighting strong safe-haven and industrial-metal demand.
Crypto: Bitcoin trades at USD 91k, down 16.9% MTD and 2.9% YTD, reflecting a sharp correction after prior gains. Solana is at USD 137.51 and Ether at USD 3,038, with steeper declines of 26.4% and 21.3% MTD and 28.6% and 9.2% YTD, underscoring broad crypto deleveraging.
Outlook for 2026: Central bank policy paths, pro-growth measures, U.S.-China trade talks, and AI monetization will drive returns. Resilient growth and investment momentum in AI, energy, and defense create a supportive environment for diversified and currency-hedged portfolios.
Global equities have stalled in November after a strong earnings-driven rally, with major indices flat to slightly lower as investors take profits, particularly in technology. The 3Q reporting season has been very strong, leading to upgraded global earnings expectations of close to 10% EPS growth this year and next, with tech still the main driver. Beyond tech, easing tariff risks, resilient consumption, anticipated fiscal stimulus in the U.S. and Europe, and the prospect of Fed rate cuts create a favorable backdrop for the equity rally to resume into 2026.
In the U.S.: S&P 500 (+16% YTD, flat MTD), market turbulence, but earnings and AI still support U.S. equities
Recent volatility in November reflects worries about rich valuations, an uncommitted Fed, uncertainty over funding AI investment, and patchy consumer and labor data. Yet, Q3 earnings have been very strong, with broad-based beats pushing S&P 500 profit growth into the mid-teens and sales growth above 9%, driven mainly by solid revenues. AI demand still exceeds supply, cloud revenues are accelerating, and both fiscal policy (“One Big Beautiful Bill Act”) and a still-supportive Fed backdrop underpin the earnings outlook.
In Europe: Euro Stoxx 50 (+16% YTD, flat MTD), brighter earnings cycle, and improving structural outlook
After three years of flat earnings, we expect European profit growth to accelerate to around 6% in 2026, supported by better consumer and business confidence, clearer trade conditions, and accommodative global policy. Europe’s structural story is also improving, with healthier regional banks, stronger prospects for global capex, and increasing political focus on competitiveness, while valuations remain reasonable versus global peers.
In China: Solid earnings outlook and ongoing AI-driven support
The Hang Seng China Enterprises Index (HSCEI) is up 26% YTD (flat in November) as China equities have delivered sustained gains on better liquidity, reduced tariff risk, and rapid progress in AI and innovation, and we expect mid-teens earnings growth in 2026 to support a continued rally. The recent pullback mainly reflects profit-taking after strong performance and optimism around the one-year U.S.-China trade truce, with overall valuations still reasonable at about 12x P/E. We are positive on both structural growth in China’s technology sector as well as financials. Despite a 5% drop in HSTECH in November amid global AI valuation concerns, we still see China tech as very attractive with AI monetization, chip localization, and rising capex pointing to around 40% earnings growth in 2026.
In 2025, FX markets have been driven by trade tensions, geopolitical conflict, growth differentials, and shifting central bank policies, a backdrop we expect to persist into 2026. Monetary policy divergence remains key: the ECB and SNB have almost completed their easing cycles, while the Fed, BoE, and RBA are expected to keep cutting into 2026. Against this backdrop, we expect the USD to move lower, particularly versus Asian currencies, while the Bank of Japan stands out as a likely outlier with further rate hikes.
EURUSD close to 3-year high at 1.16, up 11% YTD: expecting some volatility
EURUSD may get closer to 1.20 as softer U.S. data allow further Fed easing, while European political uncertainty (notably in France) caps euro upside. On the downside, stronger U.S. growth, a less dovish Fed, ongoing demand for unhedged U.S. equities, or renewed European political stress could push EURUSD lower. On the upside, a more dovish Fed, persistent U.S. twin deficits, reduced French political risk, or stronger euro area growth and fiscal support could lift EURUSD above 1.20.
USDRMB declines to 7.07 from 7.37 high: stronger RMB on solid fundamentals and policy support
The RMB is supported by the PBoC’s commitment to currency stability, easing trade tensions, Fed rate cuts, and China’s record current account surplus alongside steady exporter conversion flows. Seasonal year-end demand should add to this strength, making a return to the previous USDRMB high of 7.37 unlikely. We see USDRMB potentially testing 7.00 in the near future, with stronger support around 6.30.
USDJPY rebounded to 156 (flat YTD): scope for a downside move
In 2026, we see room for USDJPY to decline from around 155 toward 140, supported by a U.S. economic slowdown, Fed rate cuts, and the potential appointment of a more dovish Fed chair. At the same time, BoJ policy normalization, including a December rate hike, should further narrow U.S.-Japan yield differentials, reinforcing the case for USDJPY to reach 140 within the next 18 months.
Bank bonds were stable in November, underpinned by robust earnings driven by higher revenues, resilient trading, and solid fee income, with banks increasingly focused on fee generation and cost control. Capital is strong, with an average CET1 ratio of 16%. We continue to favour high-quality issuers offering attractive carry.
The financial bond asset class provides a strong risk-return profile, especially if growth weakens and rate cuts carry on. Bank bonds are an appealing cash alternative, offering yields above 4% in USD and 3% in EUR.
Gold: +60% YTD with further upside potential
Gold has consolidated above USD 4,200/oz after an exceptional ~60% rally in 2025, making it the best-performing asset YTD. We see scope for further gains in 2026, supported by additional Fed rate cuts and lower real yields. Persistent geopolitical risks, U.S. election noise, fiscal concerns, ongoing central bank buying, and rising jewellery demand should continue to underpin investor interest.
Oil: Down 10% YTD to USD 58/bbl; oil market stabilizes
Crude oil continues to trade in a USD 55-65/bbl range, with markets watching how Russian exports evolve. These dynamics should keep prices supported, even if they drift toward the lower end of the range in the coming months. Looking ahead, we maintain a more constructive view on oil prices for 2026.
