Fundamental Backdrop Strong: Watch for Pullbacks

Franklin Templeton maintains a bullish outlook on global markets, projecting 2.5% US GDP growth and advising investors to buy equity pullbacks as earnings drive indices higher.

Key Takeaways

• 1.The fundamental economic backdrop remains strong with a GDP growth forecast of 2.5% for 2026, driven by big tech capex on AI and a resilient consumer.
• 2.Maintain a 'broadening' call on equities, favoring US small- and mid-caps, emerging markets, and Japan, with an S&P 500 target of 7,000–7,400.
• 3.The Fed is expected to remain on hold due to geopolitical tensions and persistent inflation (core PCE at 3.2%), with 10-year Treasury yields expected to stay between 4.0% and 4.25%.

Table of Contents

• Macro
• Equities
• Fixed income
• Sentiment
• Glossary of terms
• Indexes
• WHAT ARE THE RISKS?
• IMPORTANT LEGAL INFORMATION

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