Outlook: Five forces that could shape markets in 2026

Author: Dirk Hofschire

Fidelity’s Asset Allocation Research Team outlines key investment risks and opportunities for the year ahead.

Originally published in November 2025 by our U.S. partners.
Written by Dirk Hofschire, Director of Asset Allocation Research, and Jake Weinstein, SVP, Asset Allocation Research

Highlights

  • A historically wide gap between policy uncertainty and subdued market volatility may narrow in 2026.
  • Attractive valuations of non-U.S. currencies and other structural factors may support the relative outperformance of non-U.S. equities.
  • The Fed may find itself on the hot seat, as persistent inflation and high government debt complicate monetary policy.
  • AI-driven capital spending and favorable fiscal policy could continue to support the health of the U.S. business sector over the coming year.
  • With wealth playing a larger role in consumption than it has historically, asset-price changes might have a greater impact on economic growth than in the past.
Line graph showing the Exhibit 1: Economic policy uncertainty remains elevated vs. the VIX from 1990 to 2025. Economic policy uncertainty spiked to its highest in early 2024 at almost 5 on the Z score, but then dropped sharply while VIX is climbing up from 0.

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Author

Dirk Hofschire
Senior Vice-President, Asset Allocation Research
Dirk Hofschire is Senior Vice-President, Asset Allocation Research, in the Global Asset Allocation group at Fidelity Investments. In this role, he is a member of the Asset Allocation Research team, which conducts economic, fundamental and quantitative research to develop asset allocation recommendations for Fidelity’s portfolio managers and investment teams.

Mr. Hofschire joined Fidelity in 2000 as a senior portfolio analyst. Most recently he led the Market Analysis, Research and Education group within Fidelity Management & Research Company, which he created in 2005 to provide timely updates on trends in the economy and financial markets. Before joining Fidelity, Mr. Hofschire was a foreign service officer with the U.S. Department of State.
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