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 27, 2026 11:21 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 US, inflation remains the key driver of the outlook for monetary policy. In the US, we expect that the deceleration in inflation in the next several prints will

The June inflation print showed disinflation that we had expected from energy prices, tariffs, and shelter. As real economic support purchasing power and real consumption growth. Along with the

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

euro area, we expect softness in the 2Q26 GDP print; on the inflation side, while the transmission from energy prices into core faster real spending growth in 2Q26, and so real growth remains supported in the

is not yet visible in the data, we see risks that core moves up in 3Q26. And so we expect that the ECB will hike at the September

US. At a global level, the growth impulse is increasingly capex and

meeting. More broadly, global growth outlook remains in line with our mid-year outlook, with the capex cycle in the US and

manufacturing-led, with Asia at the center. 2Q growth momentum in the region

Asia supporting growth via domestic demand and exports.

is holding up better than expected, supported by AI demand and a broader capex

cycle tied to energy security, defense spending, and supply-chain

Climbing the Wall of Worry: We think the AI-capex narrative remains intact, but stretched valuations, a deluge of debt

reconfiguration.