- Wall Street expects 2026 to deliver moderate but resilient growth (global ~2.8%, U.S. ~2.02.6%) as tariff drag fades and financial conditions ease.
- The Fed is widely forecast to cut rates toward a ~3.003.25% terminal range if inflation keeps cooling and the labor market softens.
- Equities are seen supported by double-digit earnings growth and broader AI-driven capex, though valuations and recession risk remain meaningful.
- Gold is favored as a hedge amid central-bank buying and geopolitics, while oil is expected to face oversupply and inflation to stay above target in many regions.
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The primary Bloomberg article “Here’s (Almost) Everything Wall Street Expects in 2026” outlines a consensus among institutional investors that 2026 likely offers a year of soft deceleration rather than disruptive macroeconomic events. Growth appears set to diverge by geography—with the United States standing to outperform—while inflation and interest rates begin a gradual easing trajectory, albeit from elevated levels.
Goldman Sachs provides critical quantitative backups: global GDP is forecast at 2.8%, with U.S. growth at approximately 2.6% as drag from tariffs recedes and financial conditions ease. Their base case sees the Fed cutting rates twice in 2026—to a terminal range of 3.00–3.25%, down from the 3.75%–4.00% band at end-2025.
J.P. Morgan adds nuance, emphasizing a polarized market: a clear split between AI-exposed sectors and the rest and between households benefiting from stimulus and those squeezed by weak labor income. They see equities across developed and emerging markets posting double-digit gains, powered by earnings growth, AI expenditure, and stable liquidity, while recession risk remains nontrivial (~35%).
Inflation is expected to ease toward—but likely stay above—the 2% target in many developed economies. Williams of the New York Fed forecasts inflation at ~2.5% in the U.S. during 2026, reaching 2% only in 2027; economist surveys project core PCE inflation in the U.S. around 2.2%–2.8%. Interest rate trajectories reflect that caution: most forecasts expect a couple of cuts, phased over 2026, conditional on labor market softness.
On equities and commodities, the mood is optimistic but cautious. Earnings per share (EPS) growth is projected to be strong—often double digits—with a widening base beyond tech. Goldman Sachs sees cyclical sectors like Industrials, Materials, and Consumer Discretionary catching up. Meanwhile, gold is a favored store of value, while oil faces potential oversupply unless supply-side behavior (e.g., from OPEC+) intervenes.
Strategic implications include tilting portfolios toward sectors with durable AI capex exposure, being selective in geographical allocations (favor U.S., parts of EM, especially Asia), preparing for yield curve shifts (10-year Treasuries seen trending modestly higher), and incorporating inflation hedge instruments such as gold or real assets. Key risks are overheating inflation from policy missteps, delayed rate cuts, labor market deterioration, or sharp geopolitical shocks.
Open questions remain around: how tariff and migration policies evolve and feed into inflation; the extent to which AI can meaningfully boost productivity outside headline winners; the impact of Fed leadership transition (from Powell post-May 2026); and how recession risks marry up with political risk in a full election cycle.
Supporting Notes
- Goldman Sachs forecasts global GDP growth of 2.8% in 2026, vs. consensus of ~2.5%, with U.S. growth around 2.6%.
- SIFMA survey’s median forecast for U.S. 4Q/4Q real GDP growth is ~2.2% in 2026, up from H2 2025 estimates [(~1.9%)], reflecting improving outlook among economists.
- Bloomberg-surveyed economists expect U.S. inflation in 2026 to be ~2.8% year-over-year and median GDP growth of ~2.0%.
- BofA predicts two Fed rate cuts in 2026—bringing the terminal funds rate down to the 3.00%-3.25% range, after a 25 basis-point cut in December 2025.
- Fed officials such as John Williams expect inflation to moderate to ~2.5% in 2026, with 2.0% target reached in 2027; unemployment to decline after rising to ~4.5% late 2025.
- Equity markets expected to post double-digit gains; J.P. Morgan puts U.S. earnings growth at 13–15%, buoyed by AI investment, global equities, both in developed and emerging markets.
- Gold seen as a leading commodity: GS projects gold would hit ~$4,900 by December 2026; FT survey sees ~7% gain to $4,610/oz. Oil faces oversupply; GS forecasts Brent ~US$58 on average, with possible trading range $55–65 depending on supply adjustments.
- According to the OECD, Fed has “room for three more rate cuts,” expecting key rate down to ~3.25%-3.50% by spring 2026, while inflation remains above target.