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Overview
Welcome to the seventh edition of our annual investment publication, Agenda 2026. This document is produced by our Chief Investment Officer, Tracey McNaughton, with contributions from each of our asset class specialists.
Together, we aim to provide clarity on the forces reshaping the investment landscape and the implications for portfolio construction in the year ahead.
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Global Growth
Global growth is expected to be modest, in the high‑2% to low‑3% range, weaker than the pre‑COVID norm but not recessionary. Support will come from infrastructure spending and a resilient consumer. Emerging and developing economies are expected to grow faster than developed economies.
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Inflation
Global inflation is projected to ease toward roughly mid‑3% in 2026, down from the peaks in 2022 but still somewhat above central bank targets in several major economies. Modest easing in labour markets will allay pressure on wages.
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Interest Rates
The global easing cycle is maturing as reflected in global bond yields being the highest since 2009. Overall, 2026 will see mildly accommodative global monetary policy with some divergence – the U.S. is expected to ease while Japan is expected to tighten. Australia is likely on hold.
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Fiscal Policy
Structural demands (defence, demographics, energy) and a lack of political capital mean most developed market governments are neither willing nor able to tighten the fiscal purse strings. Fiscal policy is therefore likely to be mostly accommodative despite high debt levels.
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Bond Yields
Acute geopolitical uncertainty and structural demands on the public purse mean bond yields will remain elevated. Bond investors will need to be more discerning as the notion that all developed markets offer comparable political stability or fiscal reliability is no longer viable.
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Equities
Equities will outperform bonds over the next 12 months. Supporting the outlook is a resurgence in M&A and IPO activity, solid corporate fundamentals and easy financial conditions.
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Currencies
Expect the U.S. dollar to weaken modestly over the next 1–2 years as global growth broadens, but not to lose its core dominance or collapse. Our base case is for a softer, more volatile dollar.
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Alternatives
Long–term shifts toward increased geopolitical risk, supply chain adjustment, and rising government debt levels highlight the importance of extending portfolio allocations to real assets, private markets, and new alternative diversifiers.
