Growth remained positive, but is slowing

The global economy entered 2026 in a clear late‑cycle phase. Growth remained positive, but is slowing, inflation is easing unevenly and markets are increasingly sensitive to interest‑rate volatility and geopolitical risk. February highlighted a key theme for investors: the environment is maturing, but resilience across regions and asset classes continues to support opportunity, provided portfolios remain selective and diversified.

Macro themes

• Manufacturing activity improved, with global PMIs rising by some 0.5 percentage points.
• Goods inflation continued to moderate, but U.S. services and wage pressures kept inflation sticky at 2.4% headline and 2.5% core.
• The Fed, ECB and BoE all held rates steady, maintaining a data‑driven stance.
• U.S. fiscal deficits and heavy Treasury issuance kept long‑term yields elevated.

Regional growth overview

• United States: Was supported by resilient consumption and AI‑driven productivity gains, but earnings remain narrowly concentrated in mega‑cap technology.
• Europe & United Kingdom: Eurozone inflation fell to 1.7%, lifting real incomes and sentiment.
• Japan: Continued to outperform due to reforms, wage growth and expectations of further fiscal support.
• Emerging markets: Asia ex‑Japan and Brazil remained firm; China continued to struggle with property sector stress.