LGT Private Banking House View

February 2026 - in a nutshell

At the start of 2026, the global economy is on firmer footing than many had anticipated a year ago. Recession fears have not materialised, with consumption and investment - particularly in the United States - proving resilient. Easing inflation pressures, the prospect of more supportive monetary policy and ongoing fiscal impulses provide a constructive backdrop, even if geopolitical tensions and institutional uncertainties continue to generate bouts of volatility. So far, however, these risks have done relatively little to derail the underlying real-economic momentum.

  • Date
  • Author Patrick Huber, Investment Solutions Europe, LGT Private Banking
  • Reading time 7 minutes

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Against this environment, we maintain a moderate risk on stance: we favour equities over cash, are "Neutral" on fixed income and alternatives, and see recent geopolitical theatrics more as a trigger for consolidation than a reason to change strategy. We remain on high alert, closely monitoring the situation and are prepared to meet ad-hoc if the situation were to escalate. Equity markets have started the year positively, with leadership broadening beyond a narrow group of large technology companies and earnings expectations improving across regions, especially in emerging markets. We keep our preference for emerging markets, as a weaker US dollar and lower rates are supportive, and retain positive views on sectors such as Industrials and Healthcare, while remaining cautious on consumer related sectors.

In fixed income, carry has become the dominant driver of returns as central bank actions are largely priced in, making selectivity and risk management more important than ever. We remain cautious on developed market government bonds and investment grade credit, "Neutral" on high yield, and constructive on emerging market hard currency bonds, where carry and structural improvements are attractive. 

Our currency and precious metals views reflect the underlying theme: a world of gradual macro normalisation, but also of enduring geopolitical fragmentation, in which robust portfolio diversification and prudent hedging - including through assets such as gold - play an increasingly central role.

Macroeconomic environment

The global economy ended 2025 more resilient than expected, with previous recession fears proving overstated despite significant headwinds. Consumption and investment - particularly in the United States - showed notable stability and provide a solid foundation for the start of 2026. The prospect of easing inflation pressure, room for monetary policy easing, and fiscal impulses continue to support the growth outlook. While geopolitical risks weigh on sentiment, they have so far done little to alter the more constructive real-economic backdrop.

Investment strategy

Our Investment Committee maintains a moderately "risk-on" stance and risk assets remain in favour despite rising geopolitical tensions. We remain on high alert, closely monitoring the situation and are prepared to meet ad-hoc if the situation were to escalate. Solid US growth, a gradual euro area upswing and a projected rebound in Switzerland continue to support the market backdrop. Equities are underpinned by robust earnings momentum, while gold is delivering as an effective geopolitical diversifier.

Equity strategy

Despite increased geopolitical risks, equity markets had a good start to 2026, with emerging markets and Japan leading while the US market lagged. The main reasons are a lower-risk environment - despite sporadic flare-ups - improving economic momentum, and strong earnings expectations across most regions. The upside is broadening beyond large-cap tech companies, and cyclical sectors are outperforming defensive ones. In this environment, we leave our regional and sector preferences unchanged. We continue to prefer emerging markets, as a weaker USD and lower interest rates are supportive. At the sector level, we maintain our "Attractive" view on the Industrials sector, which is expected to benefit from stimulus measures and reduced tariff uncertainty. Healthcare also remains "Attractive" thanks to further re-rating potential after drug pricing and tariff risks have been reduced. We continue to have the least preference for consumer-related sectors, due to affordability issues and weak pricing power.

Fixed-income strategy

Fixed income is increasingly a carry story as central banks actions are largely priced in, so we keep the duration in USD/EUR/CHF "Neutral" and avoid concentrated long‑end government exposure amid persistent steepening risk. In credit, tight Investment Grade (IG) and High Yield (HY) spreads call for high selectivity as dispersion rises and carry, rather than further spread tightening, dominates forward return drivers. Against this backdrop, we remain an "Unattractive" stance on developed‑market government bonds and IG, "Neutral" on HY, and maintain an "Attractive" stance on EM hard‑currency credit, where elevated carry, structural credit improvements and a still‑vulnerable US dollar support our constructive view.

Currency strategy

We see the macro and policy mix favouring a stronger euro versus US dollar, and a lower USD/CHF with the Swiss franc well supported by its safe-haven status in an era of global fragmentation. Fed easing and fading US institutional qualities should slowly lift EUR/USD, while Switzerland’s strong fundamentals and geopolitical neutrality underpin gradual franc upside (USD/CHF downside) despite potential SNB smoothing. In contrast, Japan’s robust external surplus and Bank of Japan (BoJ) normalisation argue for medium term yen support, but shifting domestic politics and renewed "Takaichi trade" dynamics raise near-term volatility and make the Japanese yen path significantly less predictable.

Precious metals

Rising geopolitical and institutional risk premia, including tensions around Iran, Venezuela and NATO/Greenland as well as legal pressure on the Fed, support an attractive stance on gold as an "anti‑fiat" safe‑haven asset. This is reinforced by global fragmentation, with tariffs, sanctions and the weaponisation of payment systems prompting especially EM central banks to diversify reserves away from the US dollar, reflected in robust ongoing gold purchases. Lower real yields and solid ETF inflows add macro tailwinds to the positive gold view, while silver remains neutral after a policy‑driven squeeze, despite its structural deficit and critical‑mineral status.

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