Economic and asset class outlook June 2026
This PERSPECTIVES provides a summary update of our economic and asset class views following the quarterly CIO Day. These views are supported by 2026 and 2027 forecasts for GDP growth and inflation, along with 12-month (June 2027) targets for key policy rates and fixed income, equities, commodities and FX markets.
Global growth is moderating as the Iran-related energy shock weighs on economic activity. US economic growth is expected to remain solid in 2026 and 2027, but Eurozone and Japanese growth will slow before modest recoveries next year. Chinese growth may be less affected by international developments this year but is forecast to slow slightly in 2027. With higher energy prices now feeding through, we have raised our 2026 inflation forecasts for most major markets and central banks are expected to shift towards a tighter stance.
Although the environment is likely to remain volatile, we expect further equity market gains over the next 12 months. We also see price potential in high-quality bonds in the coming months, in a declining yield environment. Gold, as a portfolio diversifier, should continue to be in demand. We remain constructive on private markets, with hedge funds potentially able to provide some downside protection, particularly during periods of market volatility.
Letter to Investors
Turbulent times; resilient markets to date
Investors face an apparent paradox: despite ongoing geopolitical risks, rising inflation concerns, and the threat of a global energy crisis, equity markets overall have proven generally resilient – at least to date. This is despite the significant burden that the Iran conflict – and, in particular, its impact on oil and gas traffic through the Strait of Hormuz – is placing on the global economy and the resulting fall in economic growth expectations.
There is a simple explanation for this paradox: markets always look forward. And most market participants, ourselves included, anticipate some sort of resolution to the conflict with Iran in the foreseeable future despite recent developments: we expect that the Strait of Hormuz will at least partially reopen to shipping by mid-year. Markets are therefore currently pricing a Brent oil price of around USD85/bbl in December 2026, significantly below current levels. Easing energy markets, combined with ongoing expansionary fiscal policies, should help avoid a recession in the US and Europe, although they will not solve other underlying
growth problems here or elsewhere. However, there are still clear risks to growth and markets if the conflict continues and prevents energy flows from resuming after the summer.
This cautious (if fluctuating) optimism about an eventual resolution to the Iran conflict has been reflected in recent moves in equity markets, although there are regional variations. While energy-intensive sectors and cyclical stocks have often been under pressure, energy and technology (particularly artificial intelligence) stocks have generally outperformed.
Rising earnings expectations are also delivering a substantial positive impetus to markets.
The market environment will remain volatile, but we still expect further overall market gains over the next 12 months, creating opportunities. In the technology sector, we are particularly focused on hardware. In the energy sector, we look across the value chain (power generation, transmission, and storage). Cyclical stocks are only likely to come back into focus once the situation in the Strait of Hormuz sustainably improves. We also see price potential in high- quality bonds in the coming months, in a declining yield environment. Gold, as a portfolio diversifier, should continue to be in demand – with its appeal also lifted by expansionary fiscal policies and rising government debt.
We will keep you updated about our view – be it in person or via our CIO Update Calls.
Christian Nolting Global CIO
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