In early 2026, global markets maintained their upward momentum, spurred by optimism surrounding artificial intelligence (AI), easing inflation, and support from central banks. This uptick defied concerns about geopolitical tensions and high valuations. Unique to this rally was its breadth; both stocks and bonds rose concurrently, leading to a substantial reduction in credit spreads and broad gains across asset classes.
Despite this optimism, analysts caution about the risks of a so-called “diversification mirage” where assets expected to provide protection move in parallel, potentially exposing investors to greater risks than perceived. The consistency of asset performance in 2025 raised concerns about sustaining such growth, especially with significant good news already priced in.
Stock performance was robust, with U.S. stocks gaining about 18% and global stocks 23%, buoyed by interest cuts from the Federal Reserve. However, inflation remains a key concern, with some experts warning that price pressures could resurface due to fluctuations in energy prices.
Wealth inequality was highlighted as the richest 500 people saw their total wealth rise to $2.2 trillion, despite declining consumer confidence in the U.S. Notably, traditional investment strategies, like the 60/40 stock-bond portfolio, performed well, indicating investor optimism regarding economic resilience. Overall, asset allocation strategies remain positive, viewing current conditions as favorable for investment.
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