Morgan Stanley Research: Key Forecasts: Next 12-Months Outlook: Our High-Conviction Calls

Research evidence excerpt

Morgan Stanley Research: Key Forecasts: Next 12-Months Outlook: Our High-Conviction Calls

Global Idea

June 29, 2026 07:32 PM GMTM

Morgan Stanley Research: Key Forecasts

Next 12-Months Outlook: Our High-Conviction Calls Next 12-Months Snapshot

The economic outlook remains constructive. In the context of the Morgan Stanley mid-year outlook, the US economy is evolving in line US data continue to benefit from a stable consumer and robust equipment investment, reinforcing

with our benign de-escalation baseline following the recent decline in oil prices. Incoming data suggest that our stronger AI-driven demand our view that real growth remains steady and consumption dynamics are closely tied to inflation.

scenario remains plausible. Markets, however, are still debating what the 2Q rise in oil prices means for inflation. MS forecasts expect the We expect consumption to be soft as energy weighs on disposable income but as that passes and

pass through from headline to core inflation to remain modest if indeed oil prices remain below $100/barrel. This summer should also mark tariff inflation passes, we see consumption improving. At a global level, we have written about the

risks to growth and second order effects may transmit across PMIs. Euro area PMIs stabilised in

a clear y/y disinflation trend as we move one-year post-tariffs. The downward effect of tariffs should more than offset any residual oil price

June, with manufacturing outperforming services. The print reinforces that growth momentum is

risks. The tension in these forces remains central to central bank decisions this summer, as the ECB has already hiked and the Fed debate

improving, albeit soft and inflationary risks seem contained. In Asia, 2Q growth momentum is

remains strong.