RBC Wealth Management’s Global Portfolio Advisory Committee has published its Global Insight 2026 Midyear Outlook, providing analysis of the key headwinds and tailwinds across asset classes and geographies.
Since war broke out in the Middle East in February 2026, investors have watched as equities, bonds, commodities, and currencies reacted to the constant news flow. The war has proven the defining market impulse of the first half of 2026, and a reopening of the Strait of Hormuz is the critical factor to abate inflation, quell bond yields, prevent a prolonged rate-hiking cycle, and improve the corporate earnings outlook.
While the durability of a peace deal remains in question as we move into H2, there are many factors shaping the investment outlook across asset classes over the next six months and beyond:
- Markets have repriced modest central bank rate hikes ahead, but the reaction in longer-dated bond yields has been more significant, suggesting bigger factors are at play.
- The UK is facing some specific headwinds such as the broadly held perception that there will be a change in prime minister. The political overhang and weak domestic growth picture are likely to hold back flows into UK equities near term.
- For the U.S. economy, corporate earnings and equity prices, a continuation of the AI capital spending juggernaut will remain the dominant factor.
- The S&P 500 has experienced an average 21% correction surrounding midterm election years since 1934. Given the market has already endured a brief 9% pullback last spring, this begs the question: Has the usual midterm election year performance hiccup been satisfied?
RBC Wealth Management makes sense of this all in Climbing the Wall of Worry. Its Portfolio Advisory Committee provides insights on the key market opportunities and risks.
Expert views cut across asset classes and regional nuances to draw the following topline conclusions:
- Midyear focus on Unstoppables: some investment opportunities built on structural forces are powerful enough to transcend the noise of today’s investment environment. These megatrends include ‘gray wave’, the transition to renewables, AI spending, medical advances and defence spending.
- Global equity: the outlook for all economies and equity markets would be improved by a reopening of the Strait of Hormuz.
- Global fixed income: geopolitical turmoil and oil prices are just the latest trees in a forest of factors steadily driving bond yields higher, building on a multiyear trend that shows no real signs of ending.
