The key change is not simply slower growth concerns; it is a repricing of the entire macro environment and risks. Markets have shifted from expecting monetary easing to pricing in tighter policy across many major central banks. This shift reflects persistent inflation risks, now amplified by higher energy and, potentially, food prices. This underscores a “higher-for-longer” interest rate regime.
The first quarter of 2026 delivered a pointed reminder that markets rarely move along a single axis. Investors are grappling with multiple shocks: a conflict in the Middle East that is disrupting energy supplies, ongoing uncertainties in global trade and supply chains, concerns about AI investment intensity and disruptions, and rapidly shifting expectations for global monetary policy. What matters most is not any single shock, but the cumulative effect. Together, these developments have fundamentally altered how investors should think about growth, inflation, and risk.
At the start of the year, the consensus view favoured a synchronised global expansion. This narrative has not entirely broken down as economic data, particularly in the US, still points to resilience. But investors should be clear-eyed about what that resilience represents. Much of it is backwards-looking. The forward path is less certain.
