Discover our convictions for 2026
Macro context
Last September, we highlighted that the environment was still favourable to risk assets and that it would support a continued steepening of yield curves. Our conclusion will not be radically different at this start of the year.
Growth momentum remains positive. In recent months, growth forecasts for the major economies have almost all been revised upwards. This was particularly the case in the United States (1.95% expected in 2025 vs. 1.5% in August) but also in the eurozone (1.4% vs. 1.1% in August). Various leading indicators show a dynamic that is still strong in the services sectors while the manufacturing sectors seem to have finally come out of the slump after the rise in energy prices.
Fiscal policies remain highly expansionary. One Big Beautiful Bill Act passed in 2025 by the Trump administration will continue to have positive effects in 2026 (tax cuts of about USD100 billion). Moreover, it seems likely to us that new fiscal stimulus measures will be passed before the midterms: the famous dividends linked to tariffs that Trump and Bessent have already mentioned. Based on their statements, this could represent more than $300 billion. In Europe, fiscal support should also remain in place, mainly through the German recovery plan (500€ billion).
On the monetary side, once again, the trend points toward policies that will support growth. U.S. unemployment is rising, inflation seems to be under control, and executive pressure remains strong. The ECB is on hold and should remain so until the end of the first half of the year. In the Eurozone, the outlook depends on inflation trends, where downside risks seem greater than upside risks.
Micro fundamentals are also well-oriented. Valuations are high in some markets, but earnings are ultimately tied to nominal growth and should remain solid in 2026. Recent revisions have been positive, especially in the U.S.
All signals seem to be positive at the end of this year but it is always interesting to think about what could change this dynamic. Below are some possible surprises that could challenge the scenario described above:
- A surge in energy commodity prices. Consensus currently favors prices remaining very low for the foreseeable future. Yet, demand driven by the AI theme is strong, the economic context argues for sustained prices, and positioning is currently very weak. This could call into question the disinflationary scenario.
- A resurgence of inflation risk, as seen recently in Australia, which could destabilize bond markets and put pressure on risk premiums.
- Lower earnings expectations for U.S. tech players amid intensifying competition in both software and hardware.
