The second half of 2026 is set to have less support from central banks and greater dispersion among assets, according to an analysis by Franklin Templeton. Geopolitical volatility and divergence in monetary policy will shape the landscape.
The second half of 2026 will be less forgiving for investors. This is the warning from an analysis by Franklin Templeton, which outlines a scenario of greater dispersion among markets and less backing from monetary policy. Following a first half marked by the crisis in the Strait of Hormuz and the rise in oil prices, the environment is becoming more demanding.
Less Synchrony Among Central Banks
Global monetary synchrony has disappeared. While the Federal Reserve of the United States maintains a restrictive stance under the presidency of Kevin Warsh, the European Central Bank has resumed interest rate hikes in response to imported inflation. Japan, for its part, has begun normalisation after decades of ultra-accommodative policy.
This mosaic reduces the likelihood of a coordinated rescue from central banks. Positive real rates are consolidating as a structural, not transitory, condition. In this context, markets must operate without the traditional policy put that supported them in times of stress.
According to the analysis, the Fed's communication has changed. Warsh has replaced explicit forward guidance with a more data-dependent approach. This implies less anchoring for market expectations and a more flexible reaction function, but also less predictability.
Oil Remains a Critical Variable
The disruption in the Strait of Hormuz during the first half highlighted the sensitivity of the global inflationary system to supply bottlenecks. Although oil flow has partially normalised, the risk of a new inflationary shock has not disappeared.
Oil remains a critical variable for the trajectory of inflation and, therefore, for monetary policy. Any new disruption could reignite price pressures and further delay monetary easing.
For the investor, this means that volatility in energy markets will continue to be a factor to watch closely. Diversification and active risk management become essential.
The Structural Investment Cycle Gains Weight
Franklin Templeton's analysis highlights a profound change in the nature of the investment cycle. Artificial intelligence, electrification, supply chain resilience, and energy security are driving a significant increase in corporate and government capital expenditure.
This investment cycle is not short-term but may extend over several years. It shifts market leadership towards sectors linked to productivity and infrastructure. Additionally, it generates greater concentration of returns in companies capable of capturing these dynamics.
For the investor, the key is no longer to anticipate the direction of the market as a whole but to identify where structural growth resides. Companies with exposure to artificial intelligence, electrification, and energy security may offer better relative performance.
Fixed Income: Attractive with Caution
In the fixed income market, the environment suggests a more balanced and less directional stance. The transition towards more prudent central banks reduces the appeal of taking on excessive duration without adequate compensation.
The short and medium parts of the curves continue to offer value due to still elevated carry levels. In contrast, the long segments require greater selectivity given the risk of higher term premiums, persistent fiscal deficits, and steeper curves globally.
Ultimately, fixed income is once again attractive, but not due to an aggressive bet on rapid rate declines, but rather through a combination of accrual, active duration management, and selective exposure to segments where the risk premium compensates for expected volatility.
The second half of 2026 will demand a more surgical approach from investors. The dispersion between winners and losers will be greater. Consistency and the ability to identify structural trends will make the difference.
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