The Point for CEEMEA

Research evidence excerpt

The Point for CEEMEA

Strategy & Economics

Global Economic Outlook & Strategy - The Resilient Global Economy—

Cascading Supply Shocks

The interim agreement between the US and Iran has eased some key headwinds

restraining the global economy. Even so, it’s too soon to say that the challenges

are behind us. The durability of the deal remains to be seen, and the conflict has

damaged infrastructure across the Middle East. The good news is that the global

economy has absorbed a sustained period of oil prices above $100/barrel, and we

judge that global growth is tracking at 2½%, down from 2.9% prior to the conflict.

Meanwhile a new risk to the global economy may be emerging. NOAA ascribes a

greater than 95% probability to an El Niño event lasting through March 2027, with

a 63% chance it reaches very strong or super status by year-end. Historical

episodes of this severity have generated substantial and long-lasting economic

costs, primarily through disrupting agricultural output, energy generation, supply

chain logistics, and reducing labor productivity.

Nathan Sheets | Josh Williamson | Johanna Chua | Arnaud Marès | Ernesto Revilla

Global Asset Allocation - House Views June 2026 – Extra Time for the AI Trade

Since our last monthly asset allocation, oil has collapsed to pre-war levels, and the

FOMC has been surprisingly hawkish. This necessitates a change in our fixed

income allocation. We stay neutral duration, but we now favor Gilts, where oil was

more important for the CB, over Japan and the US, where oil is less relevant (and

the FOMC is more so). We also add long USD risk, given these relative rates view. In

equities, we hold the course, staying overweight the US and emerging Asia,

because liquidity has not tightened enough to burst the bubble, and because