Investment Outlook October 2026

Global growth should remain resilient despite higher rates, but AI-driven demand, supply constraints and fiscal pressures could keep inflation and long-term yields elevated while still supporting equities.

• The Atlanta Fed’s GDP Now model tracked annualised real US output growth of 5.1% in the third quarter of 2026, while the six largest AI companies—Alphabet, Amazon, Meta Platforms, Microsoft, NVIDIA and Oracle—are expected to spend more than $1 trillion on AI infrastructure over the next year.
• India’s real GDP grew 7.8% year on year, and semiconductor demand remains strong; global semiconductor sales reached a three-month moving average of $147 billion while forward AI-6 capital expenditure stood at $1.01 trillion.
• Inflation risks come from strong demand and constrained supply: data-centre electricity demand is forecast to more than double between 2024 and 2030, US commercial electricity prices have risen at a 4.3% annualised rate since ChatGPT launched in November 2022, and copper supply is struggling to match demand.
• Futures markets imply that Federal Reserve, ECB and Bank of England policy rates could rise by another 0.75 to 1.0 percentage points over the next year; Evelyn’s decomposition attributes 2.3 percentage points each of the 4.6-point rise in the US 10-year Treasury yield since March 2020 to expected short rates and the term premium.
• Fiscal deficits and debt are becoming as important as central-bank policy: the US Treasury buyback programme is about $38 billion per quarter against nearly $40 trillion of public debt, while stablecoins currently invest roughly 80 cents of each dollar in Treasuries.

Takeaway: Investors should prepare for higher-for-longer rates and long-term bond yields, but resilient growth, expanding profit margins, near-cyclical-low global equity PEG valuations and narrow credit spreads continue to support risk assets; this view depends on inflation not becoming materially more persistent.