Forecasts: Economy and asset classes

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GDP (%)

Region	2025E	2026E	2027E	2028E
US	1.9	1.7	1.9	2.4
Canada	1.5	1.8	1.8	1.2
Japan	0.8	0.7	1.0	0.8
Eurozone	1.4	1.1	1.4	1.0
UK	1.4	1.1	1.4	1.3
Switzerland	1.3	1.3	1.3	1.9
Australia	1.9	2.2	2.1	2.1
China	4.9	4.5	4.6	4.2
India	6.8	6.4	6.5	6.5
EM	4.4	4.2	4.4	4.2
World	3.2	3.1	3.3	3.2

Inflation (%)

Region	2025E	2026E	2027E	2028E
US	2.8	3.0	2.4	2.2
Canada	2.0	2.1	2.0	2.0
Japan	3.1	1.6	2.2	2.1
Eurozone	2.1	1.8	2.0	2.0
UK	3.4	2.2	2.0	2.0
Switzerland	0.2	0.6	0.9	0.9
Australia	2.8	3.1	2.7	2.6
China	0.0	0.4	0.8	1.0
India	2.4	4.3	4.0	4.0
EM	3.9	3.5	3.1	3.0
World	3.3	3.0	2.7	2.6

Equities

Index	Spot	June-26	Dec-26
S&P 500	6,851	7,300	7,700
Eurostoxx 50	5,787	6,000	6,200
FTSE 100	9,911	9,800	10,000
SMI	12,794	13,200	13,600
MSCI Asia ex-Japan	921	985	1,021
MSCI China	88	100	102
Topix	3,359	3,500	3,600
MSCI EM	1,408	1,510	1,560
MSCI AC World	1,213	1,280	1,350

Currencies

Currency pair	Spot	June-26	Dec-26
EURUSD	1.16	1.20	1.20
GBPUSD	1.31	1.36	1.35
USDCHF	0.80	0.79	0.79
USDCAD	1.40	1.36	1.35
AUDUSD	0.65	0.70	0.70
EURCHF	0.92	0.95	0.95
USDJPY	155	150	146
USDCNY	7.11	7.00	6.90

Interest rates, in %

Currency	Spot	June-26	Dec-26
Fed	3.87	3.33	3.33
ECB	2.00	2.00	2.00
BoE	4.00	3.25	3.25
SNB	0.00	0.00	0.00
BoJ	0.50	0.75	1.00

10-year benchmark yields, in %

Bond	Spot	June-26	Dec-26
USD	4.07	3.75	3.75
EUR (Germany)	2.64	2.25	2.25
GBP	4.40	4.25	4.25
CHF	0.14	0.50	0.50
JPY	1.68	1.70	1.80

Commodities

Commodity	Spot	June-26	Dec-26
Brent crude, USD/bbl	63	65	67
WTI crude, USD/bbl	58	62	64
Gold, USD/oz	4,214	4,500	4,300
Silver, USD/oz	53	60	57
Copper, USD/mt	10,944	12,000	13,000

Can AI power the market even higher?

AI-linked innovation has been the engine of the market’s ascent in recent years. Investors should remain mindful of the risks inherent in any investment boom. Yet, we believe that powerful trends in capex and accelerating adoption are likely to drive further gains for AI-linked stocks in the year ahead.

The economic backdrop

We expect the economic backdrop to be supportive of stocks in 2026. Growth enters the year somewhat uneven, but as the year evolves, we expect business and consumer confidence to improve, fiscal stimulus in major advanced economies to gain traction, and tariff effects to fade.

How will governments manage rising debt?

In some countries, current policies mean government spending is at “escape velocity” and will continue rising as a share of GDP unless decisive action is taken. We believe “financial repression”—a regime that channels savings and central bank funds into government bonds, suppressing yields—is likely to become more common in coming years.

Our currency views for 2026

Entering 2026, we see persistent US twin deficits and declining interest rates continuing to weigh on the dollar, especially as rates elsewhere remain stable. Against this backdrop, we favor long positions in the euro, Australian dollar, and Norwegian krone versus the USD. Our preference is for high-yielding currencies, which should benefit as risk appetite broadens in FX markets over the next year.

How will politics shape markets in 2026?

Political headlines will remain front and center in 2026, but history suggests their impact on financial markets is often short-lived. While trade policy, domestic politics, and geopolitics contributed to volatility in 2025, investors have since refocused on solid economic fundamentals, falling interest rates, and structural growth trends like AI.

Key risks

What risks could bring markets back to earth in the year ahead? The most prominent in our view are: 1) a potential disappointment in AI progress or adoption, 2) a resurgence or persistence of inflation, 3) a more entrenched phase of US-China strategic rivalry, and 4) the (re)emergence of sovereign or private sector debt concerns.

Year Ahead home

Disclaimers

Year Ahead 2026 – �鶹�� House View
Chief Investment Office GWM | Investment Research

This report has been prepared by �鶹�� AG, �鶹�� AG London Branch, �鶹�� Switzerland AG, �鶹�� Financial Services Inc. (�鶹�� FS), �鶹�� AG Singapore Branch, �鶹�� AG Hong Kong Branch, and �鶹�� SuMi TRUST Wealth Management Co., Ltd.

Global asset class preferences definitions

The asset class preferences provide high-level guidance to make investment decisions. The preferences reflect the collective judgement of the members of the House View meeting, primarily based on assessments of expected total returns on liquid, commonly known indexes, House View scenarios, and analyst convictions over the next 12 months. Note that the tactical asset allocation (TAA) positioning of our different investment strategies may differ from these views due to factors including portfolio construction, concentration, and borrowing constraints.

Attractive: We consider this asset class to be attractive. Consider opportunities in this asset class.
Neutral: We do not expect outsized returns or losses. Hold longer-term exposure.
Unattractive: We consider this asset class to be unattractive. Consider alternative opportunities.

Note: For equities, we have collapsed “Most Attractive” with “Attractive” and “Least Attractive” with “Unattractive” from the five-tier rating system that is found in the Equity Compass into 3 tiers.

Cautionary statement regarding forward-looking statements

This report contains statements that constitute “forward-looking statements,” including but not limited to statements relating to the current and expected state of the securities market and capital market assumptions. While these forward-looking statements represent our judgments and future expectations concerning the matters discussed in this document, a number of risks, uncertainties, changes in the market, and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to (1) the extent and nature of future developments in the US market and in other market segments; (2) other market and macroeconomic developments, including movements in local and international securities markets, credit spreads, currency exchange rates and interest rates, whether or not arising directly or indirectly from the current market crisis; (3) the impact of these developments on other markets and asset classes. �鶹�� is not under any obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events, or otherwise.

Emerging Market Investments

Investors should be aware that Emerging Market assets are subject to, among others, potential risks linked to currency volatility, abrupt changes in the cost of capital and the economic growth outlook, as well as regulatory and sociopolitical risk, interest rate risk and higher credit risk. Assets can sometimes be very illiquid and liquidity conditions can abruptly worsen. CIO GWM generally recommends only those securities it believes have been registered under Federal US registration rules (Section 12 of the Securities Exchange Act of 1934) and individual State registration rules (commonly known as “Blue Sky” laws). Prospective investors should be aware that to the extent permitted under US law, CIO GWM may from time to time recommend bonds that are not registered under US or State securities laws. These bonds may be issued in jurisdictions where the level of required disclosures to be made by issuers is not as frequent or complete as that required by US laws.

Investors interested in holding bonds for a longer period are advised to select the bonds of those sovereigns with the highest credit ratings (in the investment-grade band). Such an approach should decrease the risk that an investor could end up holding bonds on which the sovereign has defaulted. Subinvestment-grade bonds are recommended only for clients with a higher risk tolerance and who seek to hold higher-yielding bonds for shorter periods only.

Nontraditional Assets

Nontraditional Assets Non-traditional asset classes are alternative investments that include hedge funds, private equity, private credit, real estate, and managed futures (collectively, alternative investments). Interests of alternative investment funds are sold only to qualified investors, and only by means of offering documents that include information about the risks, performance and expenses of alternative investment funds, and which clients are urged to read carefully before subscribing and retain. An investment in an alternative investment fund is speculative and involves significant risks.

Specifically, these investments (1) are not mutual funds and are not subject to the same regulatory requirements as mutual funds; (2) may have performance that is volatile, and investors may lose all or a substantial amount of their investment; (3) may engage in leverage and other speculative investment practices that may increase the risk of investment loss; (4) are long-term, illiquid investments, there is generally no secondary market for the interests of a fund, and none is expected to develop; (5) interests of alternative investment funds typically will be illiquid and subject to restrictions on transfer; (6) may not be required to provide periodic pricing or valuation information to investors; (7) generally involve complex tax strategies and there may be delays in distributing tax information to investors; (8) are subject to high fees, including management fees and other fees and expenses, all of which will reduce profits.

Interests in alternative investment funds are not deposits or obligations of, or guaranteed or endorsed by, any bank or other insured depository institution, and are not federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other governmental agency. Prospective investors should understand these risks and have the financial ability and willingness to accept them for an extended period of time before making an investment in an alternative investment fund.

In addition to the risks that apply to alternative investments generally, the following are additional risks related to an investment in these strategies:

Hedge Fund Risk: There are risks specifically associated with investing in hedge funds, which may include risks associated with investing in short sales, options, small-cap stocks, “junk bonds,” derivatives, distressed securities, non-U.S. securities and illiquid investments.
Managed Futures: There are risks specifically associated with investing in managed futures programs. For example, not all managers focus on all strategies at all times, and managed futures strategies may have material directional elements.
Real Estate: There are risks specifically associated with investing in real estate products and real estate investment trusts. They involve risks associated with debt, adverse changes in general economic or local market conditions, changes in governmental, tax, real estate and zoning laws or regulations, risks associated with capital calls and, for some real estate products, the risks associated with the ability to qualify for favorable treatment under the federal tax laws.
Private Equity: There are risks specifically associated with investing in private equity. Capital calls can be made on short notice, and the failure to meet capital calls can result in significant adverse consequences including, but not limited to, a total loss of investment.
Private Credit: There are risks specifically associated with investing in private credit. This could include losses stemming from defaults on loans, which in significant adverse circumstances could result in a substantial loss of investment.
Foreign Exchange/Currency Risk: Investors in securities of issuers located outside of the United States should be aware that even for securities denominated in U.S. dollars, changes in the exchange rate between the US dollar and the issuer’s “home” currency can have unexpected effects on the market value and liquidity of those securities. Those securities may also be affected by other risks (such as political, economic or regulatory changes) that may not be readily known to a US investor.

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Forecasts

Economy

GDP (%)

Inflation (%)

Asset classes

Equities

Currencies

Interest rates, in %

10-year benchmark yields, in %

Commodities

Explore more of the Year Ahead 2026

Can AI power the market even higher?

The economic backdrop

How will governments manage rising debt?

Our currency views for 2026

How will politics shape markets in 2026?

Key risks

Disclaimers

�鶹��

Forecasts

GDP (%)

Inflation (%)

Equities

Currencies

Interest rates, in %

10-year benchmark yields, in %

Commodities

Growth

Can AI power the market even higher?

The economic backdrop

Income

How will governments manage rising debt?

Our currency views for 2026

Diversification

How will politics shape markets in 2026?

Key risks

Disclaimers