01.12.2026
The year of the Leopard
In 2026, we expect the US to avoid recession, while the Eurozone and China will remain dependent on planned stimulus and fiscal plans. Inflation will converge toward target on both sides of the Atlantic, while in China it will remain below target. In this context, we are moderately constructive on bond markets and positive on equity markets.
We no longer count the years that go by without the American recession that had been widely predicted by analysts and investors. 2025 was one such year and, in our opinion, 2026 will be yet another.
While forecasts at the end of last year were influenced by expectations that tariffs would drag the American economy into a stagflationary spiral (a scenario that never materialised, as we correctly hypothesised), the year 2025 is ending with a slowdown in the labour market, leading to cries of: “It’s happening this time!” from the most inveterate Cassandras.
We still believe the American economy will once again avoid a recession in 2026, given a demand that, albeit unbalanced in terms of higher-earning consumers, remains stable; data clearly show that American business owners have rebalanced the composition of factors of production in favour of investments in artificial intelligence – which are highly productive and fiscally incentivised – to the detriment of the labour factor. Un-employment, however, did not increase alarmingly, as the Trump administration’s immigration policies notably reduced the labour supply and drove businesses to retain their employees where possible.
Therefore, we believe the United States is experiencing a production revolution befitting of Giuseppe Tomasi di Lampedusa’s The Leopard, aiming to meet consumption demand that remains strong, but with a different mix of factors of production.
The same revolutionary principle could apply to Eurozone and China, with one substantial difference: a precondition for the two economies to start recovering and avoid re-cession, as per our baseline scenario, is for Germany to implement its approved ambitious fiscal plan, and for China to continue launching reforms and stimuli to support domestic demand.
Our macro-outlook remains consistent with an inflation trend that is on track for its target both in the United States and the Eurozone, whereas we expect price dynamics in China to continue moving well below the target of the PBoC. This should be enough to support both the Federal Reserve and the European Central Bank on their path to easing financial conditions for disinflationary reasons, although more evident in the USA, due to political pressures set to grow with the upcoming midterm elections. The Chinese central bank will also play a role in cutting rates, but the keystone for emerging from the disinflationary trap remains the considerable development of fiscal stimuli or the adoption of unconventional monetary policies: the latter, we believe, is unlikely in 2026.
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