LGT Private Banking House View

September 2026 - in a nutshell

The investment environment remains more supportive than the headlines might suggest. Economic growth has proved resilient on both sides of the Atlantic, inflation has eased from its earlier peaks and Europe’s recovery is becoming broader. At the same time, investors face an uncomfortable combination of geopolitical tension, energy- price risk, restrictive monetary policy and growing public-sector borrowing needs. This is not a setting for complacency - but neither is it one that calls for stepping away from risk assets altogether.

  • Date
  • Auteur Patrick Huber, Investment Solutions Europe, LGT Private Banking
  • Temps de lecture 7 minutes

Moderne Architektur und Gebäude im Finanzzentrum
© Shutterstock

We therefore maintain a moderate risk-on stance. Equities remain our preferred asset class relative to strategic allocations, while we remain cautious on fixed income. Alternatives and cash are held at "Neutral" weights. This positioning reflects a simple conviction: corporate earnings and economic activity still provide a constructive foundation for markets, but the room for policy support is limited and risks are sufficiently elevated to warrant selectivity.

While the US economy continues to show notable resilience - supported by consumer spending and investment associated with the rapid adoption of artificial intelligence - second-quarter growth in Europe was stronger than expected, driven by exports, an industrial recovery and fiscal impetus. However, the European Central Bank’s scope to ease policy is limited as core and services inflation remain uncomfortably firm, making another rate increase in September likely. Against this backdrop, we continue to favour US over euro-area equities.

Our fixed-income stance balances a tactical opportunity in USD duration against persistent structural headwinds. Credit spreads remain tight by historical standards, while ongoing fiscal deficits, elevated government issuance and sizeable AI-related capital expenditure are increasing demand for capital. These factors are likely to keep upward pressure on longer-dated government bond yields over the medium term. However, following the recent rise in yields, we see scope for a near-term pullback in yields, making USD duration tactically attractive.

The months ahead are likely to bring periods of volatility. Yet resilient growth, improving corporate earnings and continued innovation justify measured optimism. The appropriate response is not to chase every market move, but to remain invested, diversified and selective - participating in opportunity while respecting the risks that increasingly shape the investment landscape.

Macroeconomic environment

The eurozone surprised to the upside in the first half of 2026 - GDP, PMIs and export dynamics defied prior fears and beat expectations convincingly. The growth composition remains fragile, however: weak domestic demand, the structural weakness of China as a key export partner, and asymmetric energy price risks warrant caution. Persistent core inflation leaves the ECB no room for easing - quite the contrary, it compels a further rate hike.

Investment strategy

We maintain our moderate risk-on stance and confirm the top allocation level: equities remain "Overweight", fixed income "Underweight", and alternative investments and cash "Neutral" relative to their strategic weights. Within equities, US equities remain "Overweight" and euro-area equities "Underweight" as the region remains highly exposed to geopolitical risks, while elevated energy prices present an additional headwind. We believe current valuations do not adequately reflect these concerns. US companies continue to offer relatively stronger earnings growth and upside potential. Investment-grade corporate bonds remain "Underweight", reflecting supply pressure and scope for spreads to normalise further, while gold remains "Neutral". We remove the existing USD currency hedge on US equity exposure, as the US dollar’s carry advantage limits the potential for sustained euro appreciation. 

Equity strategy

Following a consolidation phase in June and July, equity markets resumed their upward trend in August. The main driver was strong quarterly earnings, particularly from hyperscalers, which reported accelerating revenue growth. This has eased concerns about a near-term slowdown in AI investment. Despite persistently significant geopolitical risks, economic momentum has also improved, and the recovery is broadening beyond the AI sector. Against this positive backdrop, we are upgrading the Industrials sector to "Attractive", as it should be a key beneficiary of both the cyclical recovery and continued investment in AI infrastructure. While valuations are relatively high, we believe this is more than offset by improving earnings momentum. Regionally, we maintain our "Attractive" view on US equities, supported by a solid macroeconomic backdrop. While the outlook for eurozone earnings growth is improving, we believe this is already reflected in current valuations. We therefore maintain our "Unattractive" view on euro-area equities.

Fixed-income strategy

Rising long-term US yields reflect mounting concern over high deficits, rising interest costs and the country’s substantial refinancing needs. The elevated term premium is weighing particularly on the long end of the Treasury curve, even though some economic and inflation data would normally have supported lower yields. The Treasury has responded by expanding buybacks of longer-dated securities. This may temporarily ease technical pressure and signals a willingness to act, but it does not resolve the underlying fiscal challenges or the risk of higher term premia. Greater reliance on short-dated T-bills would also increase sensitivity to short-term interest rates. Over the coming weeks, inflation, labour-market and growth data, along with communication from Fed Chair Warsh, will be critical. Despite the structural risks, we remain tactically positive on USD duration and favour maturities of seven to ten years. Current yield levels offer attractive nominal and real returns without assuming the disproportionate risk of the ultra-long end.

Currency strategy

The global foreign exchange outlook remains finely balanced. Solid US growth and attractive carry continue to support the US dollar, while expected ECB tightening, eventual Fed easing and Treasury intervention should gradually narrow the US rate advantage, leaving EUR/USD broadly balanced. The yen remains under pressure from unfavourable rate differentials, elevated US yields and fiscal concerns, despite official intervention near USD/JPY 160. We therefore maintain a neutral stance on the major currency pairs and leave our forecasts unchanged. At the six- and twelve-month horizons, we expect EUR/USD at 1.15, USD/CHF at 0.78 and 0.77, GBP/USD at 1.33 at both horizons, and USD/JPY at 161 and 160, respectively.

Precious metals

Gold held recent gains as subdued US inflation and weak labour market data reduced expectations of further Fed rate hikes, weighing on the US dollar and easing pressure on bullion. Strong central bank demand, notably from Poland and China, provided additional support, with total net purchases reaching a healthy 289 tonnes in the second quarter. Gold’s structural outlook remains underpinned by geopolitical fragmentation, shifting trade patterns, reserve diversification and US policy uncertainty. Also, the metal’s momentum is improving. We maintain our six- and 12-month targets of USD 4700 and USD 5000, respectively, and our "Attractive" Gold versus US dollar recommendation.

LGT Navigator Nvidia results lift technology sentiment Tous les articles
Déconnexion
Inspirés par l'avenir depuis des générations
Nos newsletters - automatiquement up to date

Les newsletters LGT vous informent régulièrement sur les insights et les nouveautés dans les domaines de l'économie, de la finance et bien plus encore.

Inscription à la newsletter
Follow us
Scaling impact LGT Venture Philanthropy