Capital Group's 2026 Outlook report delves into many market-driving issues, including tariff uncertainty, the challenge of high valuations, corporate earnings expectations, and how sticky inflation and weakening labor markets are influencing the path of interest rates. It also identifies key investment themes and how they're affecting various asset classes. Here we offer an overview of the opportunities as we see them. Be sure to download the full report for a deeper dive.
December 18, 2025
The global economy shows its resilience
In our view, investors should expect improved economic stability in the year ahead, with the potential for reacceleration in the second half, as the path of global trade comes into clearer focus. The U.S. has negotiated trade deals with many countries, and tariffs generally have settled at much lower rates than initially feared.
"The clearer picture on tariffs should free up businesses to make capital decisions, like investing in reshoring supply chains."
Jared Franz
Economist
Sources: Capital Group, National Association for Business Economics, International Monetary Fund World Economic Outlook October 2025 (published October 14). Market consensus refers to the general views, expectations or forecasts of market participants about key economic, financial or market metrics. ECB: European Central Bank, GDP: gross domestic product, BoE: Bank of England. Figures reflect latest available data as of November 30, 2025.
Macro outlook: Less uncertainty, healthy growth
2026 Outlook webinar
5 forces could stimulate the U.S. economy
AI opportunity set expands across the economy
With hundreds of billions of dollars invested in just the past few years, the AI build-out continues at a staggering pace. Three distinct areas of AI investment opportunity have emerged: The four layer technology stack that powers AI systems, companies providing infrastructure for operations and organizations adopting applications to enhance productivity.
“Microsoft, Alphabet, Meta and others have the incentive and resources to continue investing aggressively, generating greater demand for advanced semiconductors and infrastructure.”
Mark Casey
Equity portfolio manager
Source: Capital Group. AI tech stack represents Capital Group’s interpretation of four layers of technology that enable AI to operate. Companies listed are examples of businesses that are among leaders of market share in each segment. TSMC is Taiwan Semiconductor Manufacturing Company. As of November 30, 2025.
Stock market outlook: 3 investment strategies for 2026
Are we in an AI bubble?
Fresh breadth? Market concentration in 3 charts
Bonds should offer ballast
Economic growth prospects are up, just as job growth is weakening. For investors, this unusual backdrop underscores the potential for bonds to offer steady income and a measure of downside protection. Starting yields have historically been a strong indicator of long-term return potential. At today’s valuations, high-quality bonds can play the dual role of generating income and acting as a buffer.
“The biggest question facing investors is whether the labor market weakness will weigh on consumption. That would increase the risk of a sharper downturn in growth.”
Chitrang Purani
Fixed income portfolio manager
Starting yields often indicated long-term returns
Annualized five-year total return (%) of Bloomberg U.S. Aggregate Index
Sources: Capital Group, Bloomberg. Return and yield figures are for the Bloomberg U.S. Aggregate Index. “Current” value is based on latest starting yield to worst (the lowest yield an investor can earn if the bond is redeemed or called before its maturity date), using the historical linear trend line to approximate implied forward five-year return as of November 30, 2025. Past results are not predictive of results in future periods.
High-income municipal bonds: 5 portfolio themes for 2026
What happens if U.S. debt becomes unsustainable?
The strategic value of allocating to high yield
Get the 2026 Outlook report
Long-term perspective on markets and economies
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*Source: Marketing Support: The Advisor View, May 2025, June 2024, May 2023, July 2021, June 2020; Fund Intelligence, February 2020. FUSE Research surveys of 500-1,000 advisors identifying the “most-read thought leaders.” Survey was not conducted in 2022.
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