Christian Armbruester

Markets enter 2026 with confidence bordering on complacency. Equity indices remain close to record highs, volatility is subdued, and investors appear comfortable looking through geopolitical risk, fiscal slippage and late-cycle signals.

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Macro & Policy Environment

Global growth continues to decelerate modestly rather than collapse. The US economy remains resilient, supported by strong corporate balance sheets and earnings growth, while Europe shows tentative improvement after a prolonged period of stagnation. China remains the outlier, with policy support cushioning downside risks but failing to deliver a decisive cyclical rebound.

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Equities

Equities continue to grind higher, led by the US, although leadership has broadened beyond the narrow mega-cap dominance, whilst earnings growth has been sufficient to justify current valuations. Outside the US, relative performance has improved, particularly in Europe and selected emerging markets, as valuation gaps and currency dynamics become more supportive. Equity returns look to be increasingly driven by earnings delivery rather than multiple expansion.

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Fixed Income

Fixed income remains attractive from an income perspective, but duration risk is asymmetric. The front end of the curve offers compelling yield with improving visibility on policy easing, while long-dated bonds remain vulnerable to fiscal concerns and supply pressures. Credit fundamentals remain broadly sound, though spreads offer less compensation than earlier in the cycle.

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Alternatives, Commodities & Currencies

Gold and other precious metals continue to act as a strategic diversifier, supported by central bank demand and persistent geopolitical uncertainty. The US dollar has come under a lot of pressure as a function of US policy rather than reflecting relative growth resilience and interest-rate differentials. While this may moderate over time, it remains an important consideration for global asset allocation and emerging market exposure.

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Key Risks

• A re-acceleration in inflation that delays or limits expected rate cuts

• Fiscal stress pushing long-term yields higher and tightening financial conditions

• Geopolitical escalation disrupting energy markets or global trade

• Valuation risk in equities if earnings momentum weakens

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