Investment Outlook and Portfolio Strategy Q3 2026

Fiera Capital expects persistent inflation and geopolitical and trade uncertainty to keep growth subdued, favouring defensive positioning and selected private-market exposures.

• Canada rebounded in the second quarter of 2026, but weak domestic demand, U.S. tariffs and uncertainty around the USMCA argue for Bank of Canada patience rather than a pivot.
• The U.S. economy remains resilient because of tax refunds, labour-market strength and AI-related consumption and capital expenditure; above-trend growth and inflation above the Federal Reserve’s 2% target reduce the prospect of rate cuts.
• Europe, the United Kingdom and Japan face prolonged pressure from imported energy costs, while China shows a two-speed economy: industrial production and AI/electronics exports remain strong as household spending weakens under the housing crisis and fragile employment.
• Fiera assigns probabilities of 45% to sustained inflation, 30% to stagflation, 15% to recession and 10% to a productivity boom; the main risks are renewed conflict affecting the Strait of Hormuz, AI-related chip shortages and new U.S. tariffs under Section 301.
• Its scenario matrix projects, in the sustained-inflation case, returns of 2.7% for U.S. equities, 9.7% for emerging-market equities, 6.5% for diversified credit and 10.0% for private equity; the current strategy allocates 38.5% to non-traditional income, 27.5% to traditional capital appreciation and 16.5% to private equity.

Takeaway: The recommended stance is underweight bonds and cautious on equities, with cash, private credit, real assets and private equity used for resilience and diversification; however, the projections are hypothetical, model-based estimates and could differ substantially from actual results.