Global Asset Allocation Views 3Q 2026

J.P. Morgan Asset Management remains moderately pro-risk because resilient growth, strong earnings momentum and a fading energy shock outweigh the risk of higher inflation.

• The U.S. economy is expected to grow at a 2% pace over the next 12 months, while global capital expenditure excluding China accelerated to an annualized rate above 10% in the first half of 2026, led by AI and semiconductor demand.
• The firm expects Brent crude to fall toward USD 80 a barrel or lower by year-end as the Iran de-escalation holds and supply remains ample, limiting the energy shock's pass-through into core inflation.
• The Fed is expected to remain on hold through 2026, while the ECB and BoE also stay put for the rest of the year; the Bank of Japan is expected to deliver another hike later in 2026. U.S. core inflation is projected to fall to 2.8% by year-end, although upside risks remain.
• Equities are moderately overweight, with a preference for U.S., Japanese and emerging-market stocks and a neutral view on Europe. The S&P 500 is projected to reach 8,400 over 12 months, based on earnings growth and an approximately unchanged 21x multiple.
• U.S. high yield is favored mainly for carry because spreads are already tight, while European duration is preferred through Italy and UK Gilts over U.S. Treasuries; the 10-year Treasury is viewed as fairly valued within a 4.20%–4.75% range.

Takeaway: The recommended positioning favors equities, U.S. high yield and European duration, but investors should monitor upside inflation, a possible positive stock-bond correlation, AI-related supply constraints and a potential reversal in momentum, whose volatility has reached levels last seen in 2020.