New year. New Perspectives.
From GDP and China growth to AI, find out what our BofA Global Research team is saying about the 10 themes for this year to come.
Thomas (T.J.) Thornton | Claudio Irigoyen | Aditya Bhave | Helen Qiao | Benjamin Bowler | Chris Flanagan | David Hauner, CFA | Francisco Blanch | Mark Cabana, CFA | Michael Hartnett | Michael Widmer | Neha Khoda | Ralf Preusser, CFA | Savita Subramanian
Key takeaways
- More bullish than consensus on 2026 U.S. GDP growth
Boosted by the OBBBA, restoration of TCJA benefits, fiscal stimulus, Fed cuts. - No AI bubble yet
AI investment spend has already boosted GDP growth and BofA U.S. Economics expects continued AI growth next year. Derivatives Strategy’s new Bubble Risk Indicator suggests we’re yet to see bubble-like instability in core U.S. tech. - Constructive EM, solid backdrop with lower USD and oil
A weaker USD, lower rates and low oil prices provide a solid backdrop while technicals are favorable, especially with investors long-term underinvested. - More bullish than consensus on 2026 China GDP growth
We recently raised our China GDP growth forecast. The Trump-Xi meeting in Korea set a more positive tone on trade, and policy stimulus is trickling in. - Muted S&P returns but expect broadening, strong capex
U.S. Strategy expects 14% EPS growth in 2026 but only 4-5% S&P price appreciation. We expect a strong, broadening capex cycle; we are more concerned about consumption. - U.S. needs lower inflation, favor long bonds in 1H26
Michael Hartnett believes President Trump needs to lower inflation and that contrarian Treasuries should be well bid until the new Fed Chair in May. Start trading “MID.” - Expect flattish long rates and U.S. home prices
U.S. Rates Strategy expects the 10Y to end 2026 at 4-4.25% with risks to the downside. Securitized Products Strategy expects housing to become front and center in ’26. We expect flat home price appreciation and an improvement in housing turnover. - Expect volatility, especially as AI impact becomes clear
A better understanding of the impact that AI has on growth, inflation and capex will cause volatility. K-shaped recovery, fiscal dominance are other sources of vol. - Private credit returns likely lower in ’26, prefer HY
We expect 5.4% total returns for Private Credit (PC) in ’26, down from 9% in ’25. Potential for lower returns will impact PC allocation decisions. - Copper to perform on tight supply, strong demand
Base metals have pushed higher in ’25 even with tepid demand from manufacturing and construction. Commodity Strategy expects continued supply challenges in 2026.
Read our full analysis for a more in-depth look at these trends.
