Key themes for 1Q 2026

• Solid foundations for global growth in 2026
• The U.S. economy has sustained its robust underlying architecture
• The Federal Reserve is approaching neutral, balancing inflation and employment concerns
• Equity market returns will be dependent on strong earnings growth
• Fixed income credit: Tight spreads but benefiting from robust macro tailwinds
• Focus on balance and diversification

By Raj Singh
Portfolio Manager, Multi-Asset

Is the prospect of a rewarding 2026 filled with successful investment opportunities too good to be true? Many investors seem to think so. Sentiment has cooled amid concerns about sluggish U.S. growth, persistent inflation near 3%, a softening labor market, and renewed geopolitical and trade tensions. Yet, there are still plenty of reasons to remain optimistic as we head into the new year.

By Raj Singh
Portfolio Manager, Multi-Asset

Markets remain unsettled as long-delayed economic data trickles in after the U.S. government shutdown, leaving investors navigating a persistent “data fog.” Backward-looking indicators dominate, but the real question is forward GDP momentum. Recent volatility reflects uncertainty: the economy shows resilience, yet cracks are emerging as lower- and middle-income households face tighter credit and rising costs, even as wealthier consumers stay buoyant. This divergence matters—consumer spending drives growth.

By Raj Singh
Portfolio Manager, Multi-Asset

• Global economic strength has withstood U.S. trade policy shocks
  Growth forecasts have recovered since Liberation Day and have even improved for 2026. Yet, elevated inflation and U.S. dollar weakness are the lingering scars of the trade policy shocks, adding to already rising global fiscal concerns.
• U.S. recession fears have been dismissed, helped along by strong consumers and AI capex spend

The Federal Reserve’s decision to cut rates by 25 basis points at its September meeting—bringing the target federal funds rate to a range of 4.00% to 4.25%—marks its first move in nine months. More telling than the cut itself is the tone accompanying it. Labor market activity has softened since the last FOMC meeting, prompting the Fed to resume its easing cycle. However, the broader economy isn’t weak enough to warrant aggressive action. Instead, the Fed is signaling a cautious, measured approach—balancing the risks of a slowing labor market against persistent inflation uncertainty.

By Raj Singh
Portfolio Manager, Multi-Asset

By Raj Singh
Portfolio Manager, Multi-Asset

Trade policy uncertainty is anticipated to remain high despite recently announced trade deals, with Trump administration utilizing tariffs as a negotiation tactic. This ongoing "tariff noise" will likely become a fixture in the economic landscape. While the impact of tariffs on China is projected to be mild, tariffs is likely to affect Mexico and Canada significantly. In Europe, tariffs are likely to stabilize around 15% based upon the latest trade deal announced but will also be influenced by sector-specific tariffs.

• The global growth outlook has stabilized amid shifting trade dynamics
  Global economic resilience is emerging despite recent macro, policy, and geopolitical shocks, while investor focus has shifted away from U.S. dominance toward a more balanced global outlook.
• U.S. tariff threats have receded but will leave a bad taste on growth, the labor market, and inflation

By Raj Singh
Portfolio Manager, Multi-Asset