2026 Outlook

"We see core inflation rising to as high as 3.5% by the middle of 2026 – way outside everyone's comfort zone."

"Lower energy prices will be key to manifesting many of President Trump's signature economic goals: principally, the reindustrialization of the country and winning the baseload battle that underpins AI supremacy."

"On the Fed, only a few more cuts are anticipated by our Rates Strategy team and consensus, net income growth is expected to peak in 2Q26 in consensus estimates, and the lower P/E’s of the Russell 2000 vs. the S&P 500 reflect a much lower ROE in Small Cap."

"Canada is facing a new reality on three fronts – trade, fiscal policy, and immigration. This new reality translates to lower growth, but not necessarily more rate cuts, and growing chances that hikes start in 2026."

"A pullback in spending by the upper 10% of income earners could be caused by something like a 10% correction in the stock market."

"The German budget is going to expand, and we think that will really drive growth in 2026 both in Germany itself and the euro area."

"2026 is likely to be a fairly range-bound environment for Treasuries. It’s going to be more about tactical trading than putting on large directional positions on either duration or curve."

"Australia’s inflation looked to be fading, but is back to 3%-plus – the supply side of the economy simply isn’t able to keep up with the pick-up on the demand side."