According to Kevin Gordon, Director of Macro Research and Strategy at the Charles Schwab Center for Financial Research, if fiscal support expands, the labor market remains stable, and consumer spending is sustained, the US will face some upside inflation risks in 2026. This could potentially restrict the Federal Reserve to just two or three interest rate cuts.
Discussing the economic outlook for 2026, he believes the global economy is in a state of persistent flux and rebalancing. This environment is causing capital to shift rapidly between different investment styles and is leading to high dispersion within market sectors.
Kevin Gordon pointed out that artificial intelligence (AI) continues to dominate capital allocation and corporate strategy, but its investment impact is maturing. Whether AI-related stock prices can continue to rise in the future will depend on valuations being supported by substantial earnings growth, rather than being driven by speculation alone. Therefore, solid earnings will be the key to supporting stock prices, especially for sectors that have already outperformed others.
Lester Kwok, a Financial Consultant at Charles Schwab Hong Kong, stated that even if the Federal Reserve continues to lower short-term interest rates, the yields on fixed-income assets, while slightly lower than last year, remain attractive. He forecasts an annualized return of 4.8% for US aggregate bonds over the next decade, which is slightly below last year's projection of 4.9%.
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