Westbourne Research Services strategist Sharmila Whelan expects 2026 to open with a relatively constructive backdrop for risk assets, supported by easier monetary policy and fresh rounds of targeted fiscal stimulus in major economies. Her outlook emphasizes that investors must navigate persistent geopolitical risks and uneven global growth while positioning for a moderate upturn rather than a boom.
Big picture for 2026 markets
Whelan’s base case is that global growth in 2026 should remain resilient, helped by pro‑growth policies, still‑supportive fiscal spending, and interest rates that move closer to “neutral” after an extended tightening cycle.
She sees a backdrop where outright recession risks are contained but regional divergences remain, with the U.S. and parts of Asia likely to modestly outperform more sluggish areas of Europe.
Central banks and rate cuts
According to Whelan, the major central banks are likely to pivot from restrictive policy to a more neutral stance as inflation continues to trend lower, though not all at the same speed.
This environment favors quality bonds and duration again, while also supporting equity valuations as discount‑rate pressures ease, especially in interest‑sensitive sectors like technology and real estate.
Global stimulus expectations
A key part of her view is that fiscal policy will stay at least mildly expansionary, with governments prioritizing infrastructure, energy transition, and strategic industrial policies.
She also flags potential new U.S. stimulus impulses linked to measures like the “One Big Beautiful Bill” and possible tariff‑rebate checks, which could add hundreds of billions of dollars of demand into 2026 if fully implemented, though timing and scale remain uncertain.
Regional winners and losers
Whelan expects Asia and select emerging markets to benefit disproportionately from a weaker U.S. dollar, ongoing reforms, and targeted domestic stimulus.
By contrast, she is more cautious on economies with limited fiscal space and lingering structural headwinds, warning that investors should discriminate by country rather than treat emerging markets as a single block.
Asset class implications
In equities, Whelan favors regions and sectors leveraged to capex, infrastructure, and artificial intelligence adoption, arguing that earnings revisions are turning more positive outside the U.S. as policy support kicks in.
In fixed income, she sees opportunities in high‑quality sovereign and corporate bonds as yields stabilize, while cautioning that credit selection will matter more if growth disappoints or if stimulus is delayed.
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Key risks she highlights
Whelan stresses that the main risks to her constructive outlook are policy mistakes, renewed inflation spikes, or an escalation in geopolitical tensions that disrupt energy and trade flows.
She notes that markets are currently pricing a relatively “Goldilocks” scenario, so any disappointment on growth or stimulus delivery could trigger bouts of volatility and a rotation back toward defensive assets.
