Optimistic markets amid uncertainty

Macroeconomic update for May 2026

The conflict in the Middle East has now entered its third month, with no clear end in sight. Despite disruptions in energy markets, major asset classes are back in positive territory, and equities in the US and Japan have surged to all-time highs. So, what’s driving this optimism? Markets have started to price out worst-case scenarios, while corporate earnings and consumers are still providing support. Still, higher energy prices are weighing on purchasing power and complicating the outlook for inflation and central banks. What’s the Multi Asset Boutique’s take? And how much pressure are higher energy prices actually putting on the real economy? Find out in the latest CIO Monthly video.  

  Key Takeaways  

1. Rebound     
   Rising market pressure in late March likely pushed the US administration toward a more conciliatory stance and the start of negotiations.  
   
   
2. Will they, won’t they?  
   Higher inflation puts central banks like the US Federal Reserve in a dilemma by delaying rate cuts, and signs of softness in the US labor market make further rate hikes unlikely, in our view.  
   
   
3. Positive outlook, but…  
   The Multi Asset Boutique believes the macroeconomic backdrop is resilient for now, but a sustained period of elevated oil prices may eventually begin to weigh on global growth, making a reopening of the Strait of Hormuz important in the coming weeks.  

Even the smallest undertaking starts with a conversation