Market Outlook 2026
by
Felix Ronner
An outlook on the global economic and market environment in 2026: geopolitical fragmentation, structural constraints on growth, and a changing monetary and fiscal policy landscape will shape the environment. At the same time, despite elevated uncertainty, long-term opportunities for risk assets remain. The following overview highlights the key structural, economic, and market-related drivers.
Structural Environment – Geo-economics and Polarisation
The era of globalisation is increasingly being replaced by geo-economic considerations. Trade and capital flows are becoming more politicised, the global trading architecture is fragmenting along geopolitical lines, and adherence to rules in global trade is weakening. At the same time, high public debt, demographic change, and low productivity growth are resulting in low global trend growth. Elevated debt levels are also exacerbating inequality, further fuelling political polarisation.
Geopolitical tensions – particularly related to the war in Ukraine and the conflicts in the Middle East – remain elevated. In addition, discussions around potential de-dollarisation and a stronger decoupling of certain BRICs countries from the West are gaining relevance. Over the long term, increasing polarisation between the “West” and the “Global South” could make the financing of Western debt more challenging.
Economic Outlook – Moderate Growth Amid Elevated Risks
Thanks to monetary easing by many central banks and expansionary fiscal policies in major economies, global growth is expected to increase moderately in 2026. Downside risks, however, remain significant, particularly due to uncertainty surrounding US trade policy.
In the United States, productivity gains remain strong, allowing growth to exceed trend levels at times. In Europe, a modest recovery is emerging, but overall economic momentum remains subdued. In China, weak domestic demand combined with rising production capacities is putting pressure on industrial sectors in advanced economies.
While inflation and interest rate cycles have been highly synchronised since the pandemic, greater divergence is expected going forward. The ECB and the SNB are likely to have completed their rate-cutting cycles, while the Fed is expected to reduce rates significantly, leaving US monetary policy relatively accommodative in 2026. Over the longer term, increasing (state-directed) investment activity should support growth.
Geopolitical and Political Risks – Fragmentation as a Persistent Condition
Geopolitical risks have continued to rise and are likely to remain elevated over an extended period. Flashpoints such as Ukraine, the Middle East, and Taiwan are reinforcing the trend toward fragmentation of global trade flows. At the same time, fiscal policy in most countries is expected to remain expansionary, with no clear return to austerity in sight.
Additional risks stem from the rise of EU- and euro-sceptic parties in Europe as well as protectionist measures by the US administration. A renewed escalation of global trade tensions – particularly between the US and China – would have lasting negative consequences for global growth and financial markets. The risk of technological decoupling and economic bloc formation has also increased. Moreover, the global decline in birth rates represents a long-term drag on trend growth.
Market Environment – Opportunities Despite Volatility
Due to elevated nominal growth and a relatively accommodative US monetary policy, risk assets remain attractive over the long term. While the outlook for equities remains volatile and prone to pronounced corrections, it is fundamentally positive in the long run, as rising corporate earnings can make a significant contribution to performance.
The trend toward sustainable investments and “green finance” is expected to strengthen further across all asset classes. Yields on safe-haven government bonds such as German Bunds and US Treasuries are likely to move sideways over a multi-year horizon, while tending to rise at the long end of the curve. Rate cuts are making spread products attractive; carry and roll-down remain key return drivers, with a focus on short- and medium-term maturities, high quality, and defensive sectors.
From a currency perspective, the outlook for the Swiss franc and the Japanese yen remains positive, while long-term downside risks persist for the British pound. Overall, the environment for precious metals remains favourable over the long term.
The full Market Outlook 2026 can be downloaded here.