Global growth is expected to proceed at a more measured pace, with stronger momentum in the first half of the year, followed by moderation in the second half as the delayed impact of tariffs takes effect, according to Malaysia-based CIMB.
One of the leading banks in Southeast Asia said that in the US, Federal Reserve rate cuts and sustained investment spending, particularly in artificial intelligence (AI) and infrastructure, should continue to support growth, even as fiscal sustainability remains a longer‑term concern.
“As global markets shift, staying diversified is more important than ever, investors can benefit from balancing portfolios across core global equities and fixed income. We see promising opportunities in Asian equities and short-to-mid tenor corporate bonds, which offer attractive value,” CIMB said.
The US dollar is likely to stay on a weakening trajectory in 2026, though the decline is expected to be volatile rather than linear. For investors, this underscores the importance of diversifying away from the U.S. dollar, especially during periods of temporary strength, while remaining mindful that volatility may intensify around key events such as changes in Fed leadership and the U.S. mid‑term elections.
Enhancing portfolio stability
Also, fixed income is set to play a more important stabilizing role in portfolios in 2026, as bond market volatility is expected to rise amid global uncertainty. Additionally, the US yield curves are expected to bear-steepen, creating a more complex environment for bond investors.
In 2026, CIMB recommends building a bond portfolio with an average short‑to‑mid duration, focusing on high‑quality corporate bonds in the three- to seven-year range. These bonds can provide steady income, supported by strong companies with solid financials.
Within this space, AUD (Australian Dollar)‑ and GBP (Great Britain Pound)‑denominated bonds are especially appealing, with the former offering attractive returns and the latter providing potential gains, while helping to keep risk under control.
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