Economic Growth

We introduce our Macro Regime Indicators (MRI), a framework for forecasting growth and inflation surprises in the US. The MRI on the economy shows no substantial mispricing in either growth or inflation over the next 12 months.

The neutral rate in the US is being propped up by a variety of forces that are at risk of reversing. These include the AI capex boom, large budget deficits, and the extraordinarily high level of household wealth. As such, interest rates are likely to surprise to the downside over the next few years.

Egypt’s underlying inflation pressures are much higher than the headline CPI numbers imply. Real interest rates have plunged. As such, domestic bond yields have stayed high for a reason. Steer clear.

The Fed is on hold for now, but its 2026 economic projections are far too optimistic. The Fed will ease more next year than it currently anticipates. 

Indian stocks have further downside in absolute terms as profits disappoint. Their underperformance versus the EM equity benchmark, however, is late, which warrants a shift from underweight to neutral allocation.

Understanding asset performance across Growth and Inflation regimes helps investors construct and manage balanced portfolios. Our first G&I Catalog report examines Hedge Fund strategies. Global Macro and Managed Futures offer the strongest protection in Stagflation-like periods, when traditional assets typically struggle. Since 1998, these regimes have occurred less than 10% of the time—but that may not hold true going forward.

In the absence of official government data, investors are turning to alternative sources to gauge the direction of the US economy. Our analysis of this data suggests that the economy has continued to expand at a moderate pace over the past two months. If the Supreme Court were to strike down the tariffs, this would reduce the near-term odds of a recession while raising the odds of overheating.

By tracing patterns across China’s past three Five-Year Plans, we reveal how policy cycles shape markets—and what investors should expect in the next five years.

The Fed is poised to deliver a 25-basis-point rate cut this month, but a follow-up rate cut in December will depend on how the divergence between strong consumer spending and weak employment growth is resolved.

Investors should not count on buoyant growth in the ASEAN and Indian economies because of manufacturing relocation away from China in the next couple of years.