1Q 2026 – New layout

The coming quarter should bring positive developments for the capital markets. Most sectors are expected to continue to see good earnings growth, particularly the technology sector, which will continue to benefit from the spread of AI applications and related investments. However, other sectors will also carry this year's positive momentum into the new year. These include the financial sector, healthcare, and industry. We therefore expect stock market prices to continue to rise.

The economy will not stand in the way of this, at least. We see the economic path for Europe as less uncertain than for the US. The Eurozone economy proved surprisingly resilient in the second half of the year and is likely to receive further support in the new year from higher public spending and potentially lower energy prices. The US economy will start the year with an economic upturn, but this will be due to the fact that the fourth quarter is likely to be very weak as a result of the shutdown, leading to massive acceleration in the first quarter. Apart from that, however, the US economy is entering the new year with a weak labor market and rising inflation, which is eroding consumer purchasing power. Falling interest rates and AI investments should provide tailwinds for the economy, however.

The poorer risk parameters for the US are also reflected in interest rate expectations. The markets expect key interest rates to remain unchanged in the Eurozone at least until the end of 2026, a view we share, and a further decline in interest rates in the US. It will be particularly interesting to see whether the new Fed chairman, who will take over from Jerome Powell in May, will respond adequately to potentially persistent inflation once the labor market stabilizes. Before that, we expect two further interest rate cuts in the first half of the year.

Bond markets should remain well supported in the first quarter. Over the course of the year, however, inflation risks are likely to become more significant again, causing yields on longer maturities to rise and the yield curve in Germany to steepen slightly and that in the US to steepen significantly. Corporate bonds denominated in euros remain an attractive investment in this environment. We continue to be particularly positive about the high-yield segment with its attractive yields.

US-Dollar expected to weaken against the Euro. In our view, the above-mentioned risks for the US and the continued decline in US interest rates argue against the US dollar, and we therefore expect it to weaken steadily against the euro. Falling US interest rates and sustained high demand, on the other hand, should support gold, and we expect further price increases. We anticipate a slight weakening of the Swiss franc from very strong levels.

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