Monthly House Views - The year kicks off strong - January 2026

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Intensification of uncertainties

The year 2026 begins amid rising geopolitical uncertainties: tensions escalate in Venezuela, Iran, Ukraine, and Greenland, while several political fronts harden. In the United States, Donald Trump issues numerous statements on various topics — from stances on the Federal Reserve, threats of new tariffs, to price control policies — indicating an intensification of announcements ahead of the midterm elections. In France, recurring difficulties in reaching a budget compromise highlight ongoing political instability.

Markets reinforce our convictions

Nevertheless, financial markets start the year with notable strength, especially equities. While we maintain a strong overweight stance on equity markets, we adjust our geographic preferences. We keep a clear preference for Europe, supported by the implementation of fiscal stimulus plans — notably in Germany — expected to bolster infrastructure and defense sectors.

We also remain positive on the Artificial Intelligence theme, now favoring Asian markets, whose valuations appear more attractive in this segment. Accordingly, we increase our preference for Japan and emerging markets and adopt a more balanced tone toward the US market.

We also maintain a significant underweight in bonds. Interest rate pressures are expected to persist due to growing bond supply, continued reduction of European central banks’ balance sheets, and structurally higher inflation than before. This environment justifies our caution toward sovereign bonds, while we remain constructive on corporate credit, particularly High Yield, benefiting from higher carry and lower sensitivity to rate tensions.

Finally, we keep a neutral stance on the dollar while maintaining a strategic exposure to gold, which serves its role as a hedge asset.

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