2026 Natixis Strategist Outlook: Everything, everywhere, all at once.

Inflation remains a persistent concern

Inflation factors into key risks for H2. Rising prices are a persistent concern in the post-pandemic era, and a war-driven spike in energy costs has turned up the pressure. When asked how inflation factors into H2, 97% of strategists rank inflation among the top risks – 70% rate it as a medium level of risk, while 27% rate it as a high level of risk.

Iran’s closure of the Strait of Hormuz was a key catalyst behind the inflation spike, doubling oil prices in a matter of weeks. After the US and Iran signed a joint memorandum of understanding (MOU) to end the war, energy prices have moderated. But 79% of strategists warn that the potential for an energy crisis is a risk in H2, as Iran has threatened to close the vital shipping lane again.

More broadly, strategists rate consumer confidence (70%) as a primary risk concern. How that factor plays out has been a central question for markets in recent years, as consumer spending is a backbone across developed economies. The concern appears to be that profound sticker shock at the pumps could be the final straw that shuts consumers’ wallets.

Geopolitics add even more complexity to the picture, and 70% contend that an escalation (or re-escalation) of the war is a key risk. Reason for concern has been on full display in the weeks following the MOU, as both the US and Iran have taken military action.

In the midst of the current entanglements, 64% think there’s also a risk that a new geopolitical conflict could enter the mix.

What it means for markets

Despite the political and macro shocks, markets proved to be resilient in the first half of 2026 (H1). The S&P, Euro Stoxx, and FTSE all generated modest single-digit returns. The Hang Seng was the sole laggard among major indexes, losing -9.22%.¹

Japan’s Nikkei delivered the upside surprise of the half, generating 40.36% year-to-date returns by June 30.¹ But that leadership may be changing. Only 6% of strategists think Japan will continue to outperform in H2. Instead, 42% call for the US markets to deliver the best returns in the second half.

Forming an outlook for the next six months requires a complicated model in which multiple factors need to align. There is no clear path for investors to navigate; instead, they will need to read the landscape to see how three distinct forces converge:

• Geopolitics: The war with Iran may have been an abrupt surprise to markets, but strategists do not see it as an isolated incident. Two-thirds say it is actually a confirmation of a realignment in the world order.
• Macroeconomics: Inflation ranks among the top concerns for strategists. But in terms of overall investment impact, only 27% think it has the potential to kill the rally. On the policy side, the majority (58%) think the Fed will hold on rate cuts in H2, while 21% think rate hikes are more likely.
• Markets: Strategists say AI trade is driving equities, but the picture is less clear in other slices of the portfolio. In fixed income, 48% believe Treasuries may no longer be the safe haven they were, instead 55% say it’s investment-grade corporates. Alternatives will be essential, as two-thirds see the 60:20:20 alternative diversified portfolio outperforming the 60:40.

Before the macro/market scenario strategists defined can play out fully, there will be more questions on the geopolitical front. The US/Iran MOU is a solid starting point, but investors will need to contend with new political leadership in the UK and Latin America, as well as the US midterm elections.

Change is the only constant

The US military action that ousted Venezuelan President Nicolás Maduro was only the opening act to geopolitical disruption in the first half of 2026. It was quickly followed by the more circumstantial US war with Iran and Israeli action in Lebanon, all of which is set against the backdrop of the escalating action in Ukraine.

So, in many ways, it wasn’t a question of if geopolitical risk would be realized in 2026. It was a question of when.

A shift in the world order has been underway at least since the start of the Trump 2.0 administration. It was clearly weighing on the minds of institutional investors in November when they identified geopolitical shock as the top risk factor in our 2026 Outlook survey.

Two months into the year, the US and Iran were at war. The timing may have been a surprise, but two-thirds of Natixis strategists surveyed saw the war as a confirmation of a realignment in the world order.

Peace sells . . . but who’s buying?

The defense sector is the beneficiary of geopolitical uncertainties. Defense stocks had already delivered double-digit returns in 2025 as shifting global alliances and growing uncertainty led to stepped-up defense spending.

Defense is on the respondents’ radar screen for two reasons: 1) national security concerns globally has stepped up investments in key weapons systems; and 2) the Iran war has depleted important weapons in the US arsenal, and rearmament means even more opportunity for gains. As a result, seven in ten believe the sector is poised for sustained tailwinds stemming from the Iran war.

Political change favors Latin American markets

Politics are factoring into the macro outlook for Latin America in a different way. A string of conservative wins in presidential elections, including recent wins by Abelardo de la Espriella in Colombia and Keiko Fujimori in Peru, is reshaping the political landscape to favor free-market policies.

President-elect de la Espriella has pledged to revive oil and gas exploration, expand production, and encourage greater private-sector investment. The shift marks a significant change from recent policy uncertainty and could help attract new capital to one of the region’s largest economies.

President-elect Fujimori campaigned on deregulation, strengthening security, and encouraging private investment. For investors, the victory signals a return to the market-friendly policies that helped make Peru one of the region’s most attractive destinations for foreign capital.

Considering these political shifts, 61% of strategists say leadership changes mark a turning point for investment in the region.

US elections seen as a US issue

The US has been center stage as geopolitical disruption has unfolded in the first half of 2026. Now the view in the States is likely to turn inward as the country faces its midterm election in November.

While the pundits are discussing how the midterms will shift the balance of power in Washington, strategists are weighing what it means to investors. While it may feel consequential in terms of policy and politics, only one-third of those surveyed think the midterm elections will be a turning point for markets globally.

Overall, 70% believe the House and Senate have the potential to flip, but 79% think a split Congress will be good for investors. When it comes down to the deciding factors in the election, most think gas pump prices (61%) will be more likely to have an impact on the outcome than H2 employment numbers (18%). In terms of how the election plays out, less than one-third (30%) are concerned that markets will react to the politicization of election results.

While geopolitical risks may be top of mind after a first half defined by war, shifting alliances, and political disruption, strategists see many of the consequences playing out in the broader economy.

Persistent inflation or paradigm shift?

Inflation, interest rates, trade, capital flows, and energy prices all factor into the outlook for H2, but the bigger story may be that respondents are far less worried about traditional recession risks than they are about the forces reshaping the economic landscape.

Inflation remains a concern

Inflation is a persistent concern in the post-pandemic era, and the war-driven spike in energy costs has only turned up the pressure. Overall, 70% of strategists point to consumer confidence as a risk in the second half, though few rank it as a high-level concern (61% medium/9% high).

How that factor plays out has been a key question for markets in recent years, as consumer spending has been the backbone of the economy across many regions. The concern appears to be that consumers experiencing profound sticker shock may finally begin to pull back.

Despite those concerns, recession is not a major fear for most respondents. Just 30% think recession represents a risk in the short term, while only 21% worry about a liquidity crisis and 18% point to the risk of a financial system confidence crisis.

In short, strategists are not worried about what policymakers might mishandle – they’re worried about what policymakers can’t control. That concern is reflected in the outlook for monetary policy.

Rates remain constrained

Policy appears to be modestly restrictive, and strategists generally believe central bankers are acutely aware of the consequences of tightening too much and cutting too quickly. As a result, fewer than half (45%) believe a central bank mistake poses a meaningful risk in the second half.

Inflation continues to limit policymakers’ flexibility

In the United States, 58% think the Fed will leave rates unchanged in H2. Only 18% expect one or two cuts, while another 21% believe hikes are more likely than cuts. The economy has remained stable, but inflation has remained stubborn – a view reinforced when no cuts were announced following Kevin Warsh’s first meeting as Fed president.

The story is similar elsewhere. More than half (52%) believe rate hikes are more likely than cuts from the Bank of England. Roughly three-quarters say the same for both the European Central Bank (76%) and the Bank of Japan (76%).

Inflation remains sticky in Europe and the UK thanks to ongoing energy and wage pressures. In Japan, policymakers continue adjusting to sustained inflation after decades spent managing deflation.

Even so, concerns about political interference remain limited. Only 18% think Fed independence will be eroded over the next few years.

Beyond inflation and interest rates, strategists see broader changes underway in the global economy.

Tariffs locked into trade

The standards that governed global trade for decades have been rewritten by the Trump doctrine, and now, 70% of strategists say tariffs are a long-term feature of trade assumptions. The same number also believe the TACO trade will continue to drive markets. But the shift goes beyond tariffs.

With industries increasingly focused on onshoring and friendshoring key pieces of the supply chain, nearly nine out of ten (88%) strategists see opportunity emerging from deglobalization. For investors, the shift is creating new winners as supply chains become increasingly regional.

Competition between the United States and China also factors into that outlook. Nearly eight in ten (79%) believe the war in Iran will intensify competition between the two powers. Yet despite ongoing geopolitical tensions, respondents have a positive outlook on China, with 85% believing the Chinese economy will remain resilient.

Capital becomes a strategic asset

Trade is not the only area being reshaped. Policymakers increasingly view capital as more than just an economic asset. In recent years, governments have become more active in directing investment toward strategic priorities. From the US CHIPS (Creating Helpful Incentives to Produce Semiconductors) and Science Act to Japan’s incentives for reshoring production and Europe’s strategic autonomy initiatives, public policy is playing a larger role in determining where investment flows.

The trend raises questions about how business gets done in a more fragmented world. But just four out of ten (39%) strategists worry these policies could compromise the free flow of capital over time.

Energy remains the key transmission mechanism

The war demonstrated just how vulnerable energy markets remain in this period of geopolitical instability, and strategists believe the impact reaches well beyond oil prices.

Overall, 61% say the second- and third-order effects of the Strait of Hormuz disruption will hurt markets more than elevated energy prices themselves.

Higher energy costs can curb discretionary spending among consumers, pressure corporate margins, and weigh on growth. The impact may be particularly acute in emerging markets, where one-third (33%) worry that rising energy prices could have a devastating effect on economic growth.

Looking further ahead, the consequences may not all be negative. Two-thirds (67%) believe the war will ultimately serve as a catalyst for increased investment in renewable energy.

Respondents do not expect energy prices to revisit the extremes seen earlier in the year. More than eight in ten (82%) believe oil prices have already peaked. While few expect prices to return to their January lows, most anticipate West Texas Intermediate (WTI) settling between $80 and $100 per barrel by year-end.

For investors, that means oil may no longer represent the immediate shock it did in the first half, but it remains an important source of inflation pressure and a key variable shaping the macro outlook in H2.

All in all, the macro backdrop will set the stage, but strategists believe market performance will come down to something far more concentrated. After a first half in which a handful of AI-driven companies accounted for an outsized share of returns, the question for investors is whether the trade still has room to run.

All AI, all the time

Geopolitics and macroeconomics may be presenting investors with a complex web of factors, but strategist sentiment, on equities at least, says there is only one place to look for market leadership: AI. But the AI story is becoming more interesting as opportunities extend beyond chipmakers and hyperscalers, and investors consider the second- and third-order winners.

More broadly, strategists are positive on equities, favoring the US, large caps, growth and tech. In fixed income, investors are rethinking safety with investment-grade corporates increasingly favored over Treasuries. Alternatives continue to factor more prominently in the equation, as the 60:20:20 alternatives-diversified portfolio is favored to outperform the traditional 60:40.

Taken together, the search for growth, safety, and diversification remains the defining challenge in H2.

Intelligence drives markets

AI companies have been the engine driving markets for much of the past two years, and strategists see that continuing in H2 with 91% saying it will be the single factor powering market performance. With markets depending on a handful of companies, 85% rank concentration risk as a key top concern.

But as AI has become more widely adopted and the technology is more deeply embedded within businesses, the long-term view is changing. Overall, 97% believe that AI will provide second- and third-order gains as the AI narrative expands beyond the companies that write the code, build the chips, and construct the infrastructure to support it.

In the long run, 88% believe productivity gains from AI will translate into higher corporate profits. But it will have to be a long-range factor for investment strategy as only 45% think we will see a return on investment on AI capital expenditures within the next year.

But they do see more immediate benefits. With Anthropic, OpenAI, and other major players mulling over the timing of their entry to public markets, 52% of strategists believe IPOs in the AI sector are likely to increase liquidity in private equity.

Strategists also caution AI can do more than influence the bottom line. Given the disruptive nature of the technology, 79% believe volatility driven by AI fears (as with the “SaaS-pocalypse”) is here to stay and could potentially spread across multiple industries.

Beyond the investment opportunity

The integration of AI into facets of business and everyday life has been so swift and ubiquitous that 88% say that in five years we won’t be thinking about AI, we’ll just be living with it.

AI is making its way into the day-to-day work of 76% of those surveyed. The experience has been positive, with 88% saying it makes them better at their job and 52% saying it’s been transformational for how they perform their job. But even AI has its limits for these seasoned professionals. Only 18% think AI will take their job.

What really matters to markets in H2

AI is clearly the dominant theme, but investors will need to consider other factors for a more complete view on H2. Inflation will play a role in strategy, but it’s a bigger concern in the fixed-income side of the portfolio, as only 27% of strategists think it will kill the rally.

Its persistency will likely keep rates in a higher range, and only two out of ten (21%) surveyed think markets could get a boost from a surprise rate cut. The good news is that markets have been resilient – if not also persistent – and only 6% forecast a bear market in H2.

Given current geopolitical uncertainties between the US and Iran, the war will have lingering effects on markets. Overall, 52% think defense stocks will benefit from increased spending globally. Few strategists think it will change market leadership, as only 36% think the war will drive deeper regional dispersion.

Who comes out on top?

From January to June, Japan has been the biggest gainer of all markets, delivering 40.36% returns at the half.¹ Only 6% of strategists see that run continuing.

In H1, the Nikkei benefited from the AI enthusiasm that powered markets globally. Stronger domestic growth, continued governance reform, and renewed investor interest added fuel to the rally. The result was a 30%+ gain.¹

After such a strong run, many strategists believe much of the upside is already priced in. They also see market leadership shifting back toward US equities, where AI and large-cap growth stocks remain the preferred play.

Strategists aren’t turning negative on Japan. Rather, they believe much of the good news behind the Nikkei’s strong first-half rally is already priced in. With AI expected to remain the dominant market driver, many see greater upside in the US, where the companies at the center of the AI ecosystem continue to lead earnings growth and market performance. As a result, 42% call for the S&P 500^® to outperform all others.

The US may be the clear favorite, but strategists do see opportunities elsewhere. Emerging markets ex-China rank a distant second, with 18% expecting them to lead returns. Europe (15%), China (9%), and Latin America (9%) each garner some support, suggesting strategists may see potential in these markets. But sentiment isn’t strong enough to challenge the US as the primary destination for growth.

The case against cash

Investor nerves remain elevated in the face of geopolitical uncertainty, inflation concerns, and market volatility, prompting many to consider moving to cash. Strategists warn that could prove costly, noting that cash leaves investors exposed to inflation risk (67%), may not offer returns sufficient to meet long-term goals even with rates elevated (52%), and could mean missing more attractive opportunities elsewhere in the market (45%).

Leadership remains familiar

While the first half of 2026 is a story of geopolitical disruption and economic change, strategists are sticking with the leadership themes that have driven markets for the past two years. More than three-quarters (76%) expect large caps to outperform small caps, 82% favor growth over value, and 88% believe the AI sector will continue to accelerate in H2. Just 12% think the bubble is ready to burst.

The regional outlook is more nuanced. While two-thirds (67%) expect US equities to outperform, strategists are still finding opportunities elsewhere. Emerging markets ex-China rank as the most popular alternative, followed by Europe, while China and Latin America continue to attract support from investors looking beyond developed markets.

Technology remains the common thread. In the US, 61% expect IT to be the top-performing sector, with no other sector garnering more than a 10% response. Sentiment is similar in Asia, where strategists also favor technology as the primary source of market leadership.

Europe offers a more balanced picture. Financials receive the most support (27%), followed by defense (24%) and technology (18%), suggesting investors see multiple paths to outperformance as higher rates, security concerns, and digital investment reshape the region’s opportunity set.

Latin America stands apart from every other region. There, strategists see materials (33%) and energy (27%) as the primary performance drivers, reflecting the region’s exposure to global demand for commodities and natural resources. Another 12% look to industrials for leadership.

A new safe haven

Fixed-income investors are facing the same challenge as everyone else: finding a safe anchor in a world that feels less stable. Nearly half (48%) of strategists believe Treasuries are no longer the safe haven they once were. Instead, 55% say investment-grade credit may be better positioned to play that role.

In this complicated environment, fixed-income strategy is less about making one big call and more about putting together the right mix of exposures. While strategists generally favor quality and shorter duration, the opportunities they identify differ by region, reflecting distinct economic conditions, policy paths, and yield opportunities around the world.

US

In the US, strategists favor investment-grade corporate bonds (30%), suggesting confidence that companies can continue to navigate a stable economic environment even if interest rates remain elevated. Government bonds remain part of the picture, with support split between short-duration (24%) and long-duration (21%) securities. Another 15% see opportunity in high-yield and floating-rate debt.

Europe

The outlook in Europe is similar, with investment-grade credit (36%) the clear favorite. Another one-third (33%) see short-duration government bonds as the region’s top opportunity, reflecting a preference for quality and income while limiting interest-rate risk. Some are also willing to venture beyond Europe’s traditional core markets, with 9% favoring peripheral debt from countries such as Italy, Spain, Portugal, and Greece.

Asia

Outside Japan, strategists are less focused on corporate credit and more interested in sovereign and emerging market debt opportunities. Short-duration government bonds (24%) earn the strongest support, followed by hard-currency emerging market debt (21%). Local-currency emerging market debt and developed-market investment-grade bonds each garner 15%, suggesting a more diversified search for yield across the region.

Latin America

In Latin America, strategists see the greatest opportunity closest to home. Local-currency emerging market debt (33%) ranks as the region’s top fixed-income opportunity, followed by hard-currency debt (24%). Short-duration government bonds (15%) and developed-market investment-grade credit (12%) trail well behind, reflecting confidence in regional debt markets and their income potential.

Private credit: Challenged, not broken

The higher-for-longer rate environment has created new pressures in credit markets. With debt issued during the era of near-zero rates coming due, 61% think defaults will rise as companies refinance at significantly higher borrowing costs.

Even so, strategists stop short of calling private credit the next crisis. A majority (55%) say concerns about the asset class have been overstated, while 70% believe the issues are isolated rather than systemic. Another 45% think markets have become overly negative on private credit.

Respondents are particularly constructive on Europe. More than half (52%) say the private credit opportunity looks better there than it does in the US. The same number believe recent liquidity concerns will have little impact on long-term demand for the asset class.

More routes to diversification

In an era of geopolitical uncertainty, persistent inflation, and shifting market leadership, it’s easier to make the case for alternative investments. Overall, two-thirds (67%) of strategists believe a 60:20:20 alternatives-diversified portfolio will outperform the traditional 60:40 allocation in H2.

While there is broad agreement on the role alternatives can play, the opportunities respondents identify differ significantly by region.

The US

There is no clear consensus on the top call for alternative investments in the US. This suggests strategists see the need to add a variety of diversification sources to portfolios. As strategists weigh the impact of higher-for-longer rates, tight supply conditions, and an ongoing geopolitical risk premium, they were most likely to call for energy and commodities to outperform.

Real estate follows at 15%, as investors look to capitalize on depressed valuations and attractive income streams. Private equity (15%) and absolute return strategies (15%) round out the field, reflecting a continued search for growth and diversification beyond public markets.

Europe

Infrastructure stands out as the clear favorite in Europe, with 30% of strategists expecting it to deliver the strongest returns. In a region marked by slower growth and ongoing economic uncertainty, investors appear drawn to the stable cash flows and lower correlation that infrastructure can provide.

Energy follows well behind at 15%, while private credit (12%) and absolute return strategies (12%) attract interest from investors seeking additional sources of income and diversification.

Asia

The outlook in Asia is similar. Infrastructure again ranks as the leading alternative investment, with 24% projecting it will outperform. Strategists spread outperformance evenly among energy (15%), private equity (15%), and absolute return strategies (15%), suggesting investors are balancing growth opportunities with risk management while building diversified portfolios.

Latin America

Latin America offers the most decisive outlook of any region. Nearly half (45%) of strategists expect energy and commodities to outperform, reflecting the region’s importance as a producer of both traditional energy resources and the raw materials required for global electrification and technology investment.

Infrastructure is a distant second at 18%, highlighting the degree to which respondents see natural resources as the region’s primary investment advantage.

The specific opportunities may differ by region, but the message is consistent. Strategists increasingly view alternatives as an essential source of diversification in a market defined by concentrated equity leadership, evolving bond markets, and persistent uncertainty. The question is no longer whether investors should look beyond stocks and bonds, but where they are most likely to find the diversification they need.

The geopolitics of sustainable investments

Politics remains at the center of the sustainable-investing debate, with 88% of strategists believing it will continue to divide opinions. But respondents see geopolitics, not politics, as the bigger force shaping outcomes, with 79% saying energy security will determine the pace of the energy transition. That shift is also changing how investors define sustainability, as 58% believe defense should be considered a sustainable investment. Despite the debate, 55% believe consumer demand will ultimately outweigh political pressure.

About the Natixis Strategist Outlook

The 2026 Natixis Strategist Outlook is based on responses from 33 experts including representatives from 12 affiliated asset managers, 6 representatives from Natixis Investment Managers Solutions, 4 representatives from Natixis Corporate & Investment Banking, and 1 representative from Natixis Wealth Management. The survey was conducted in partnership with CoreData Research in June 2026.

• Michael J. Acton, CFA^® – Managing Director and Head of Research & Strategy, North America, AEW Capital Management
• Yian Wang – Managing Director and Chief Investment Officer, Asia Pacific, AEW
• Fabio di Giansante – European Equity Portfolio Manager, DNCA Investments
• Nitin Gupta – Managing Partner, Co-CIO, Flexstone Partners
• Michael Buckius, CFA^® – CEO, CIO, and Portfolio Manager, Gateway Investment Advisers
• Adam Abbas – Head of Fixed Income and Portfolio Manager, Harris | Oakmark
• Robert Bierig – Deputy Chairman, Portfolio Manager and U.S. Investment Analyst, Harris | Oakmark
• Brian Horrigan, PhD, CFA^® – Chief Economist, Loomis Sayles
• Brian P. Kennedy – Portfolio Manager, Full Discretion Team, Loomis Sayles
• Lynda L. Schweitzer, CFA^® – Portfolio Manager, Co-Head of the Global Fixed Income Team, Loomis Sayles
• Craig Burelle – Global Macro Strategist, Loomis Sayles
• Elisabeth Colleran, CFA^® – Portfolio Manager, Co-Head of the Emerging Markets Debt Team, Loomis Sayles
• Bo Zhuang – Global Macro Strategist, Asia, Loomis Sayles
• Bertrand Rocher – Co-Head of Fixed Income, Mirova
• Jens Peers, CFA^® – CIO of Sustainable Equities, Mirova (US)
• Cyril Regnat – Head of Research Solutions, Natixis Corporate & Investment Banking
• Christopher Hodge – Head US Economist, Natixis Corporate & Investment Banking
• Benito Berber – Chief Economist for the Americas, Natixis Corporate & Investment Banking
• John Briggs – Head of US Rates Strategy, Natixis Corporate & Investment Banking
• Jack Janasiewicz, CFA^® – Portfolio Manager and Lead Portfolio Strategist, Natixis Investment Managers Solutions
• Garrett Melson, CFA^® – Portfolio Strategist, Natixis Investment Managers Solutions
• Chris Sharpe, CFA^® – Chief Investment Officer, Multi-Asset Portfolios, Natixis Investment Managers Solutions
• Kevin McCullough, CFA^® – Portfolio Consultant, Natixis Investment Managers Solutions
• Julien Dauchez – Head of Client Solutions, Natixis Investment Managers
• Romain Aumond, PhD – Quantitative Macro Strategist, Natixis Investment Managers
• Benoit Peloille – Chief Investment Officer, Natixis Wealth Management
• Patrick Artus – Senior Economic Advisor, Ossiam
• Rushil Khanna – Head of Asian Equity Investments, Ostrum Asset Management
• Axel Botte – Head of Markets Strategy, Ostrum Asset Management
• Chris D. Wallis, CFA^®, CPA^® – CEO, CIO, Vaughan Nelson Investment Management
• Adam Rich – Vice President, Deputy CIO, Vaughan Nelson Investment Management
• Philippe Faget, CAIA^® – Head of Private Assets, VEGA Investment Solutions
• Daniel Wiechert – Client Portfolio Manager, WCM Investment Management

Read important disclosures