From the US Market Desk: From Missouri

Franklin Templeton expects resilient US growth, persistent inflation and attractive but not cheap risk assets to favor diversified exposure while investors use higher yields and volatility selectively.

• The Institute forecasts 2026 US real GDP growth of 2.5%, above the Fed’s 2.2% forecast and the roughly 2% Wall Street consensus, while August core and headline CPI were 2.4% and 3.4% year over year.
• Markets are pricing renewed monetary tightening: the two-year Treasury yield is 4.52%, the 10-year yield is 4.74%, one-year breakevens are 2.55%, and fed-funds futures imply an 88% probability of a 25-basis-point September hike.
• The firm is constructive on US equities, targeting 7,400–7,800 for the S&P 500 on expected earnings-per-share growth above 15%; consensus EPS is $365.34 for 2026 and $416.26 for 2027, implying forward multiples of 20.90x and 18.35x.
• Near-term volatility is expected to rise after the S&P 500 gained 23.74% from the March low to the August high, amid higher oil prices, global 10-year yields, seasonality and midterm-election effects.
• In fixed income, the firm favors short-duration mandates, corporate credit and municipal bonds over cash; investment-grade and high-yield spreads are 46 and 271 basis points, respectively, while the 10-year Treasury is expected to yield 4.25%–4.75% over the year.

Takeaway: Investors should diversify across US large-, mid- and small-cap stocks, growth and value, emerging markets and Japan, while using higher bond yields and market pullbacks to build positions; the main risks are a sustained Fed hiking cycle and materially higher long-term yields.