Franklin Templeton's latest global investment manager survey covering $1.7tn in assets and concluded just days ago paints a 2026 outlook that defies perennial bearish noise. U.S. 10-year yields settle between 4% and 4.5%. S&P 500 returns hover around 9% in line with earnings growth. Expectations jumped from one Fed rate cut to three. This steepens the yield curve from 50 basis points to 100 basis points on the two-to-ten spread. The shift breaks the bifurcated pattern of U.S. growth dominance versus value elsewhere. Steepening signals broader deeper equity opportunities across regions and asset classes.

AI capex projected at $3tn by decade's end draws bubble comparisons yet lacks classic hallmarks of excessive debt unchecked mania or liquidity floods. Funding flows largely from cash. Sticky utility-like revenue streams emerge in advertising subscriptions and productivity gains. Historical bubbles burst on rising rates and early failures. Current conditions show falling rates and contained stress. The cycle sits roughly halfway through dot-com parallels. Setbacks remain likely but no bust appears imminent.

Global correlations have risen since 2008 despite structural differences. Steepening and Fed easing historically trigger P/E expansion and double-digit equity gains especially in emerging markets. Valuations favor non-U.S. regions. China UK and emerging markets trade cheapest versus the U.S. Europe benefits from defense spending multipliers of 0.5% to 2% growth outside budgets. India leads with 6% growth and tariff resilience. China exports deflation amid weak consumer confidence creating selective opportunities.

The UK faces fiscal tightening and high debt servicing yet offers cheap equities and small/mid-cap potential if housing unlocks. Overall 2026 promises widening opportunity sets if bears remain ignored rewarding focus on fundamentals over headlines.

Source: Video - 2026 Global Investment Outlook from Franklin Templeton