LGT Private Banking House View

August 2026 - in a nutshell

Markets are entering the second half of the year with a more supportive growth-in­flation mix, even as geopolitical risks remain elevated. Earlier declines in energy prices have helped inflation retreat meaningfully, restoring some confidence among consum­ers and businesses. The US economy remains in the fast lane, supported by resilient consumption and sustained investment in AI-related infrastructure, while Europe’s recovery is only gradually gaining traction from a much weaker starting point. At the same time, the renewed conflict between the US and Iran and restricted transit through the Strait of Hormuz continue to make energy markets a key source of uncertainty. 

  • Data
  • Autore Patrick Huber, Investment Solutions Europe, LGT Private Banking
  • Tempo di lettura 7 minuto

House_View_August_2026
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This improved backdrop warrants a moderately more constructive approach to risk assets. We therefore raise equities to "Overweight" relative to the strategic allocation, implemented through a larger allocation to US equities, while fixed income remains "Underweight" and cash "Neutral". We also close our tactical "Overweight" position in gold and consequently move alternative investments to "Neutral". This is a reposi­tioning decision rather than a change of conviction: gold’s structural appeal remains intact, but near-term headwinds make redeploying capital into equities more attractive. 

Within equities, we maintain our preference for the US, where improving market breadth and solid earnings prospects remain supportive. We remain cautious on the euro area given weaker growth prospects and elevated valuations. We also take prof­its in technology and reduce the sector to "Neutral", as high expectations and in­creased earnings-season volatility call for a more measured stance after a strong run. 

Taken together, our positioning reflects a constructive but selective view: greater equity exposure, led by the US, while trimming the most crowded sector exposure and retaining caution towards US investment-grade credit, where spreads leave limited room for error. We also see a tactical opportunity in US dollar duration, which can provide a useful source of diversification as the immediate macro tailwind for gold fades. 

In this House View edition, we outline why easing inflation and resilient US growth support greater equity exposure, while energy-market developments and regional divergences continue to require selectivity. We also discuss the tactical opportunity in US dollar duration, our continued caution towards US investment-grade credit, the more balanced outlook for EUR/USD, and why gold’s structural appeal remains intact despite near-term headwinds.

Macroeconomic environment

With the US-Iran conflict unresolved and transit through the Strait of Hormuz restricted, energy prices remain a key element of cyclical economic momentum, although they remain well below their earlier highs and provide an important buffer against a more damaging stagflationary shock. June inflation readings retreated meaningfully, confidence has responded positively, and the growth-inflation mix has become more favourable, sup­porting a mild cyclical upswing for the second half of the year, while energy supply disruptions remain a clear downside risk. The US economy remains firmly in the fast lane, supported by a resilient consumer sector and rising investment in AI-related infrastructure, whereas Europe is receiving an energy-price relief from a far less favourable starting point and faces a gradual, rather than forceful, recovery. Inflation is cooling materially, particularly in the United States, supporting a "hold" stance from the Federal Reserve (Fed). The European Central Bank (ECB), however, is likely to tighten conditions once more in the third quarter of 2026, despite Europe’s already modest recovery.

Investment strategy

The more supportive macroeconomic environment leads us to increase our overall risk appetite from neutral to moderately risk-on. At the top allocation level, we tactically raise equities from "Neutral" to "Overweight" compared to our strategic weight, while fixed income remains "Underweight" and cash stays "Neutral". We implement the higher equity allocation by increasing our existing "Overweight" in US equities. Conversely, we close the "Overweight" in gold, thereby also neutralising the allocation to alternative investments.

Equity strategy

Global equity markets have entered a consolidation phase. Following strong gains in AI-related stocks, particularly semi­conductors, during the first five months of the year, the sector has recently corrected. The AI trade had become crowded, while renewed uncertainty around AI data-centre investment and higher bond yields triggered profit-taking. Encouragingly, weak­ness in the AI complex has not resulted in a broader market correction, as gains in other sectors have helped offset the de­cline. Against this backdrop, we adjust IT to "Neutral" and take profits as the second-quarter earnings season gets under way. While we remain positive about the sector’s long-term growth potential, elevated expectations leave room for disappointment, particularly in management guidance. Despite its high exposure to the AI theme, we maintain our "Attractive" view on US equi­ties, supported by a solid economic outlook and broadening market participation. By contrast, we remain cautious on the euro area because of weaker growth prospects and higher valuations.

Fixed-income strategy

We have tactically upgraded our view on US dollar duration from "Neutral" to "Attractive". The new Fed Chair’s hawkish stance reinforces the credibility of monetary policy and limits the risk of further increases in long-term inflation expectations. At the same time, the renewed escalation in the Middle East has led to a marked increase in yields at the long end of the US yield curve. This improves the risk-reward profile of adding duration, particularly through ten-year US Treasuries. This is a tactical ad­justment and applies exclusively to US dollar sovereign bonds; our views on euro and Swiss franc duration remain "Neutral". By contrast, we remain cautious about US dollar investment-grade corporate bonds. High issuance volumes, particularly from hyper­scalers financing AI infrastructure, are likely to result in a mate­rially higher net supply as bond maturities decline. At the same time, the New York Fed’s Corporate Bond Market Distress Index and the muted investor reception of Amazon’s most recent bond issue point to diminishing market absorption capacity. With credit spreads still tight and seasonality typically less favourable from August through October, we maintain our "Unattractive" view on US dollar investment-grade credit.

Currency strategy

We move to a broadly neutral FX stance: US growth remains decent, both in absolute terms and relative to the euro area, and supports the US dollar. EUR/USD is now "Neutral", with six- and 12-month targets at 1.15; carry and limited upside momentum argue against chasing the pair higher. The Swiss franc remains modestly constructive, British pound neutral, and Japanese yen undervalued but constrained by rate differentials, with interven­tion risk creating downside tail risk for USD/JPY.

Precious Metals

Gold is likely to remain volatile in the near term, as elevated rates, shifting Fed expectations, US dollar strength, ETF flows and broader risk sentiment continue to drive prices. The recent sell-off reflects an unwinding of positioning rather than a break­down of gold’s structural investment case. Central bank demand and reserve diversification remain supportive, and we are tar­geting USD 4700 over six months and USD 5000 over 12 months.

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