Equities: Growth downgrades and rotation theme – BNY
BNY’s Geoff Yu notes the International Monetary Fund (IMF) has trimmed its 2026 global growth forecast to 3.0%, with uneven impacts across energy exporters, tech economies and low-income importers, influencing global equities. The disinflation trend appears stalled as headline inflation is projected to re-accelerate before easing. Yu sees markets wrestling with stretched valuations, fading momentum and a shift from acceleration to consolidation.
IMF downgrades and stagflation concerns
"The International Monetary Fund has inched its 2026 global growth forecast down again to a sluggish 3.0%. Growth is projected to rebound to 3.4% in 2027, but that is still below the average of 3.5% seen in 2024 and 2025."
"Global headline inflation is seen rising from 4.1% in 2025 to 4.7% in 2026 before easing to 3.9% in 2027, suggesting the disinflation trend has stalled."
"Stagflation risks remain in prospect. The IMF has downgraded its global growth forecasts, while both the BoJ and New York Fed have warned that higher energy prices and tariffs will continue to feed through to inflation."
"We concur with the view that geopolitical tail risks are well-covered, but that alone is unlikely to support a market that is grappling with stretched valuations and fading momentum ahead of earnings season."
"Risks remain tilted to the downside, with renewed conflict, trade fragmentation and a technology correction the key threats."
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Wall Street giants collectively raise rate hike forecasts, US Treasury futures continue to fall, gold drops over 1% to break 4000
After the US October CPI exceeded expectations, Goldman Sachs and Nomura added a forecast for an interest rate hike in March next year, while Deutsche Bank included a forecast for a rate hike in January next year. Currently, the market has fully priced in a 25 basis point rate hike in December, with a 13% probability for a 50 basis point hike. On Wednesday, the US Treasury spot market was closed, but Treasury futures continued to fall, with corresponding yields rising by about 2 to 4 basis points, and spot gold came under pressure, dropping by 1.1%.
No Need to Worry About the Cooling Down of AI Data Center Construction? The US Import Boom Is Unlikely to Subside in the Short Term, Real Impact May Come in 2029
It takes an average of 4.8 years from finalizing investment to starting construction of a data center project, and an additional 2.6 years from construction start to becoming operational. Servers usually cannot be installed until after the building structure and racks are completed. For trade partners such as Taiwan (China), South Korea, and Mexico who rely on US data center supply chain demand, the inertia in construction timelines provides at least a one- to two-year buffer for future exports.
Federal Reserve Major Debate: When Should the Tenure of “Number Three” Williams End?
The main point of contention is whether Williams should step down in June 2028, upon completing a full 10-year term, or in June 2027, when he reaches the mandatory retirement age of 65. Analysts point out that the Federal Reserve Board holds ultimate discretion; if he leaves early, Fed Chair Waller would be able to assert greater control over the appointment to this critical position. However, forcing Williams to shorten his term could easily be interpreted as political manipulation. Williams himself is expected to serve until June 2028.
Crypto prices
More
