MACROECONOMIC OUTLOOK
The geo-economic context of 2026 appears to be shaping up as a continuation of 2025. It will still be heavily influenced by the current US administration’s aggressive policies, nominal economic growth of over 6% worldwide, long-term interest rates generally above 3%, households under pressure in all economies, high commodity prices, and solid performance in local currency terms for most stock market index.
- In the United States, the US administration continues to capitalize on its economic and military supremacy to maximize its interests internationally (e.g., Greenland, punitive tariffs, military intervention, etc.). Only China seems to have the means and the will to resist it. The Trump administration’s domestic policy is increasingly buying votes in order to win the midterms at the end of 2026. However, the consequences of US policy have eroded the credibility of the dollar and US soft power internationally. The appointment of Kevin Warsh as Fed chair strengthens the status of the dollar and decrease the risk of de-dollarization.
- Nominal economic growth is high in developed and emerging countries, driven by US consumption, the long-term investment cycle, public deficits, and the fluidity of corporate financing. Given public deficits, inflation above 3% in most economic zones, and solid economic growth, upward pressure on long-term rates is likely to persist.
- Global stock market indexes continue to rise. On one hand, they offer real protection against inflation in the long term. On the other hand, earnings growth was solid in 2025 and is expected to be so again in 2026. It is driven in particular by innovations in information technology, an interest rate environment favorable to financial stocks, and more broadly, favorable economic outlook for a few other sectors.
- Household purchasing power remains under pressure, increasing the risk of populist policies and protectionism in Europe, the United States, and Asia.
- Commodity prices remain high, driven in particular by the appreciation of precious metals in response to the depreciation of the dollar and the vigorous infrastructure investment cycle.
ASSET ALLOCATION
In February 2026, our asset allocation remains largely unchanged.
- Cash, provided it is interest-bearing, offers a return that is just about equal to inflation, or at least equal to it, depending on the region.
- We maintain our favorable view on notes given current yield levels, while favoring short and medium durations to partially hedge against the risk of a yield curve steepening. Beyond that, our investment hierarchy remains largely unchanged: we favor IG Corporate over HY and sovereign bonds and notes.
- Our view on equities remains positive across all geographical regions. We are slightly refining our equity exposure:
o First, January’s currency movements are prompting us to pay closer attention to end investors’ sensitivity to the dollar against their reference currency. Second, the risk of dollar depreciation is leading us to invest in what is unique in each currency zone. More incidentally, companies whose proportion of costs in dollars, yen, or yuan is higher than the proportion of revenue in strong currencies such as the euro are to be favored.
o More generally, our sector recommendations remain largely unchanged: banks (growth, healthy balance sheets, deregulation, high interest rates), aerospace and defense, and technology stocks, although these are volatile due to uncertainty over the distribution of AI’s added value. We are adding oil majors (US pro-hydrocarbon policy, positive refining margins, high oil prices, healthy balance sheets). - Finally, although gold rose sharply in January, we maintain our favorable view on gold. It serves as a safe haven asset and is partially replacing the dollar in monetary global reserve.
