Eren Osman

The global macro environment remains constructive for risk assets. Growth remains relatively resilient supported by a strong US consumer and AI related capital spending. Fiscal easing in Germany, China and Japan adds to a continued strong growth picture. Emerging market exports remain strong led by AI and strong commodity prices. The UK remains in slow growth trajectory. The two biggest risks to the growth picture is the labour market, where continue to see few jobs added, and the AI capital investment boom coming to an end. While the inflation picture continues to shift down, the degree to which it can get to target or stay at target is limited by the strong growth environment and rising commodity prices. The expectation is further disinflation into H1 and then H2 a stall in disinflation or increase. The expectation is for another year above target for inflation from global perspective. With this inflation backdrop, central backs are likely to pause (barring the BoE), as real rates have normalised. Markets may get less of an accelerant now with central banks holding the line. A key risk to markets remain valuations. In 2026, we have seen several markets move to above average ratings including perennially cheap markets like Japan and Europe.

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