Global Investment Outlook Q4 2026

Higher real yields, tighter valuations and concentrated earnings are making markets less forgiving, so investors should favour selectivity, income, quality and diversification rather than broad beta.

• Inflation remains above central-bank targets, oil has moved back above USD100, and higher bond yields have been driven mainly by rising real yields and term premia rather than by a large increase in long-term inflation expectations.
• US resilience rests on technology-sector earnings from rapid AI investment and tight labour-cost control, but the household savings rate and labour’s share of income have declined, increasing dependence on wealthier consumers.
• The central “Broadening out” scenario assumes US growth of about 2.0%-2.5%, fading oil pressures, gradually lower inflation and consumption increasingly supported by income rather than falling savings or asset prices; the report expects two or three Fed hikes in this scenario.
• A “Productivity miracle” could lift growth, wages and profits with less inflation if AI gains spread beyond technology, while the “Shockwave” downside would combine prolonged geopolitical disruption, high oil prices, weaker real incomes, sharply slower growth and initially sticky inflation.
• Equities face pressure from higher real yields, demanding valuations and concentrated earnings, while capex is still rising faster than sales; in fixed income, high-quality credit, selective private credit and securitised credit may provide income and partial substitutes for duration.

Takeaway: Investors should remain engaged but express views selectively through durable earnings, quality income and regional diversification, recognising that higher real yields can eventually undermine credit and risk assets and that euro securitised debt may merit renewed institutional scrutiny as a diversified complement to corporate credit.