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

July 20, 2026 09:28 PM GMTM

Morgan Stanley Research: Key Forecasts

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

Morgan Stanley Strategists and Economists are competing in the Extel Fixed Income Research Poll. If investors have found In the US, we expect that the deceleration in inflation in the next several prints will

our work useful, this survey matters to us and we’d really appreciate their support. Investors can go to Extel | Voting Help to support purchasing power and real consumption growth. Along with the continued

vote/request a ballot. Thank you!

firmness in real investment spending growth, we are also tracking faster real

The economic outlook remains constructive: In the US, inflation remains the key driver of the outlook for monetary policy.

spending growth in 2Q26, and so real growth remains supported in the US. At a

The June inflation print showed disinflation that we had expected from energy prices, tariffs, and shelter. As real economic

activity continues to remain firm, we retain our outlook for the Fed to stay on hold this year and cut by 50bp next year. In the global level, the growth impulse is increasingly capex and manufacturing-led, with

euro area, we expect softness in the 2Q26 GDP print; on the inflation side, while the transmission from energy prices into core Asia at the center. 2Q growth momentum in the region is holding up better than

is not yet visible in the data, we do see risks that core moves up in 3Q26. And so we expect that the ECB will remain on hold expected, supported by AI demand and a broader capex cycle tied to energy security,

this week, but hike at the September meeting.