Market Returns

This year, we once again present our 2026 outlook as a retrospective from the future – a future in which the AI boom turned to bust.

Next week, please join me for a Webcast on Wednesday, December 17 at 10:30 AM EST (3:30 PM GMT, 4:30 PM CET) to discuss the economy and financial markets. We will also host a Webcast for APAC on Tuesday, December 16 at 8:00 PM EST (9:00 AM HKT+1 day).

And with that, I will sign off for the year. I wish you and your loved ones a very happy and healthy 2026. We will be back on Friday, January 2 with our MacroQuant Model Update.

MacroQuant is tactically overweight equities, favors an above-benchmark duration stance in fixed-income portfolios, remains bearish on the US dollar, and is bullish on gold and copper.

Monetary policy surprises shape curve trade returns. We show where steepeners and flatteners offer the best risk-reward in today’s market.

MacroQuant sees downside risks to stocks over a long-term horizon but is not yet saying that we are at imminent risk of an equity bear market.

We revamp several of our methodologies in this edition of our return assumptions. We estimate that a US 60/40 portfolio will return 6.1% over the next 10 years. This is slightly below the return assumptions for US pension funds. Investors can obtain better returns by diversifying internationally and to alternative assets.

The fact that the US economy has been slower to deteriorate than in past cycles is entirely consistent with our kinked Phillips curve framework. We will be looking to our MacroQuant model for guidance on when to turn fully defensive.