The Big Picture: First quarter 2026

Global growth is expected to improve in 2026, helped by fiscal support, easier financial conditions and reduced tariff uncertainty, while inflation trends lower toward central bank targets. In the US, tax refunds and deregulation under the One Big Beautiful Bill Act should support activity even as labor market softness stops short of signaling recession.

Major central banks appear close to the end of their easing cycles, with the Fed remaining flexible, the ECB likely on hold and the BoJ set for further gradual hikes. Credit markets remain underpinned by solid fundamentals, as investment-grade issuance is driven by AI-related capex and M&A, high-yield benefits from disciplined corporate behavior and structured products such as CLOs and agency MBS offer compelling relative value alongside attractive commercial real estate spreads.

Emerging markets stand to gain from high real yields and supportive local policy settings, leaving overall investor sentiment constructive despite ongoing geopolitical and fiscal risks.