Tighter times

Macroeconomic update for October 2026

September brought geopolitical tensions, inflation concerns, and tighter monetary policy. Even so, the global economy remains strong, although growth momentum appears to be approaching its peak. Inflation is still elevated, but much of the current pressure comes from supply-side factors and are poised to fade over time. So, are markets pricing in more Fed tightening than will ultimately be necessary? In the latest CIO Monthly video, Vontobel’s Multi Asset Boutique’s Chris Koslowski explores the recent developments and what they mean for our outlook.

  Key Takeaways  

1. Strong enough?
   While higher rates gradually slow activity, we don’t believe they’re high enough to trigger a recession at this stage.
   
   
2. Supply-side inflation
   A large part of the current inflation pressure comes from energy prices and tariffs, which we believe are likely to fade gradually over the coming quarters.
   
   
3. Market expectations for the Fed
   We believe markets may be pricing in too many rate hikes, considering that growth momentum may be approaching its peak and much of the inflation pressure is supply-driven.

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