The ever-changing market environment has created new investment opportunities. As we look ahead, here are WTW’s Top investment actions in 2026.
Institutional investors face a landscape that demands agility, specialization, and a holistic view of portfolio construction. With that in mind, we believe it is important for investors to:
The U.S. Federal Reserve delivered a widely anticipated 25bps cut in December, lowering its policy rate to 3.5%-3.75%.
The Statement of Economic Projections revised 2026 growth higher and inflation lower, while keeping the expected unemployment rate unchanged. The polling of voting Fed Board members showed widely divergent views, but at the median, they maintained only one expected 25bps cut in both 2026 and 2027. Fed Chair Powell, in his remarks, signaled a switch from ‘risk management’ cuts to greater data dependence, likely raising the bar for future cuts.
In our view, a resilient U.S. macro backdrop skews the risk toward fewer than the 50bps of rate cuts markets are pricing in for the next year. The Fed also announced $40 billion in Treasury bill purchases per month. Separately, the JOLTS data showed 7.7 million job openings in October, coming in above expectations.
Interestingly, in this rate-cutting cycle, which began in late 2024, we’ve seen long-term interest rates increase as short-term rates have fallen.
Global central bank commentary, policy rate expectations, and macro data surprises have shaped recent bond yield movements:
U.K. GDP surprised to the downside in October, contracting by 0.1% m/m. Both the services sector and construction activity posted declines, offset partly by an above-expected rebound in industrial production.
China’s November CPI rose to 0.7% y/y, driven by higher food prices, while the broader deflation narrative is likely unchanged against the backdrop of weak jobs and housing market. PPI fell 2.2% y/y, below expectations.
Japan’s final reading of Q3 GDP was revised lower to -2.3% q/q annualized from -1.8%. The overall GDP weakness is largely attributed to temporary factors such as front-loaded exports. The BOJ policy meeting ended with a 0.25% hike in its benchmark short-term rate. That took the policy rate to 0.75 per cent, its highest level since September 1995, as confidence in wage growth momentum builds. October nominal wages rose to 2.6% y/y, up from 2.1% last month.
We are thrilled to share the exciting news of WTW's strategic acquisition of Flowstone Partners, a move that significantly enhances our wealth offerings and underscores our commitment to delivering innovative solutions for our clients.
Thank you for taking the time to read this edition of What To Watch, brought to you by Jon Pliner, global chief investment officer; Jim Neill, senior director; Nikki Latta, senior associate; Garrett Goniea, senior associate; Madison Rugh, analyst and the WTW Investments team.
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