LGT Private Banking House View

March 2026 - in a nutshell

Sometimes a few data points are enough to flip sentiment. After a tough industrial year in 2025, the mood was subdued in many aspects: supply chain shifts, tariff disputes, and concerns about an economic dip after the AI investment boom weighed on markets. Now, the latest sentiment indicators - above all the significant jump in the US ISM for the manufacturing sector - are sending a different signal: global industry is back.

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

Crossroads
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This does not yet guarantee a broad upswing, but the environment has brightened. Lower interest rate levels are increasingly affecting the real economy, the recent easing of customs uncertainty is relieving the outlook, and fiscal stimulus is supporting investment activity. Against this backdrop, the Investment Committee of LGT Private Banking Europe maintains a moderately risk-oriented positioning. Equities remain "Overweight", bonds and alternative investments "Neutral", and liquidity "Underweight" compared to the strategic allocation.

At the same time, markets are becoming more selective: AI is still a central topic, but the phase of widespread euphoria is over. Winners and losers are differentiated more precisely - this creates opportunities but also requires more composure in the event of temporary setbacks. We see structural headwinds for the US dollar, while the euro and Swiss franc benefit from solid fundamentals. Meanwhile, precious metals are once again living up to their role as a hedging component in a world with geopolitical tensions and high sovereign debt after the recent correction.

In this House View issue, we show how we interpret this environment between a macroeconomic thaw and possible trend reversals and what it means for industry, regional equity and bond strategies, as well as currencies and precious metals.

Macroeconomic environment

After a weak industrial year in 2025, recent sentiment indicators are showing clear signs of recovery for the first time, led by the sharp rise in the US ISM manufacturing index. The improvement is broad-based, with notable gains in new orders and production, even though confirmation from hard data is still pending. Internationally, signs of bottoming are emerging, supported by lower interest rates, easing tariff uncertainty and fiscal stimulus. An industrial recovery could cushion a temporary slowdown in consumption growth in 2025/26, but it is still too early to call a clear global upswing.

Investment strategy

Our Investment Committee maintains a moderate risk-on stance against a backdrop of an improving growth-inflation mix and still-resilient investor risk appetite. Supported by positive macro surprises, strong corporate earnings and benign financial conditions, we confirm our tactical portfolio positioning with equities "Overweight", fixed income and alternative investments "Neutral", and cash "Underweight" versus the strategic allocation. We expect a cyclical upswing led by business investment and manufacturing, with US growth close to trend, inflation broadly contained and three Federal Reserve rate cuts in 2026, a combination that is consistent with a positive environment for risk assets.

Equity strategy

Global equity markets have advanced in recent weeks and are again trading close to (or at) all time highs, even as the so called "Magnificent 7" US mega caps have underperformed and volatility remains elevated. The main driver of this resilience is a solid earnings outlook, particularly in EM and the US, where the equally weighted S&P 500 has recently outpaced the traditional market cap weighted index on the back of a firmer macroeconomic backdrop. Investors are increasingly distinguishing between winners and losers, especially in the AI segment. Against the backdrop of elevated valuations, this reinforces markets' vulnerability to periodic spikes in volatility. In this environment, equity positioning has become slightly less extreme than at the start of the year, as some previously concentrated exposures to AI beneficiaries have been reduced.

Fixed-income strategy

A recent US Supreme Court ruling striking down Trump's "reciprocal" tariffs as unlawful signals that America's institutional checks and balances are holding up. Similarly, incoming Fed Chair Kevin Warsh is expected to base his decisions on economic data despite political pressure. Together, these developments suggest that US Treasuries should broadly maintain their role as a safe haven in times of market stress. That said, the US fiscal outlook remains under pressure: while most of the lost tariff revenues are likely to be replaced through tariffs levied on a new legal basis, short-term uncertainty is set to rise. Over the medium term, we nonetheless expect the US yield curve to steepen. Against this backdrop, we see emerging market hard-currency bonds as "Attractive", investment-grade corporate bonds as "Unattractive", and high-yield bonds as "Neutral".

Currency strategy

We continue to hold a weaker view on the US dollar and expect it to trend lower against both the euro and the Swiss franc over the coming months. The projected narrowing of the real policy rate spread between the US and the euro area and Switzerland remains the primary driver of our USD negative view, as the dollar's relative carry advantage erodes, while policy, fiscal and institutional concerns in the US, together with expectations of lower real rates over time, add further headwinds. For EUR/USD, we now target 1.22 (six months) and 1.24 (12 months), and for USD/CHF we forecast 0.74 (six months) and 0.73 (12 months).

Precious metals

The sharp correction in late January and early February removed much of the momentum-driven overshooting in precious metals prices, but left the key macroeconomic, geopolitical and institutional forces driving gold and silver intact. With speculative excess cleared out and prices back from "extraordinary" highs to levels more consistent with fundamentals, we reaffirm our constructive structural view and raise our indicative reference levels for gold to USD 5300 per ounce on a six month horizon and USD 5500 per ounce on a 12-month horizon. For silver, we upgrade our stance from "Neutral" to "Attractive" and increase our indicative reference levels to USD 88 per ounce (six months) and USD 95 per ounce (12 months), viewing the post correction set up as more balanced.

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