Insights

Interest rate expectations have shifted markedly in 2026, with markets now anticipating higher rates amid persistent inflation, economic resilience and more hawkish central banks. Despite this, strong AI-driven earnings have supported equities.

Through deep research and direct engagement with businesses, we seek high-quality companies with strong competitive advantages, disciplined capital allocation and the ability to compound wealth over time.

Significant wealth brings complex financial and personal decisions. Rothschild & Co helps coordinate trusted advisers, ensuring aligned, objective guidance, long-term planning and access to specialist expertise through a personalised advisory board.

Global equities rose despite geopolitical tensions, as markets looked through near-term risks. AI infrastructure spending drove returns and earnings growth, valuations sent mixed signals, and corporate activity remained subdued but showed signs of recovery.

Switzerland’s upcoming referendum to cap population at 10 million may tighten migration and risk EU ties, but economic impact likely limited, with living standards, markets and growth resilient over time.

Global markets remain resilient despite geopolitical tension and rising energy prices, supported by strong earnings and AI-driven optimism. However, elevated valuations, uneven sector dynamics and evolving inflation risks reinforce the importance of disciplined, long-term positioning within an uncertain macroeconomic environment.

A long-term, disciplined approach to investing prioritises quality companies and wealth preservation over short-term trends. Amid significant changes to tax rules—particularly around inheritance and estates—careful planning, regular review, and close collaboration with advisers remain essential to achieving sustainable outcomes.

Global supply chains face rising stress but remain resilient. Hormuz disruption halted key energy flows, prompting rerouting. Delivery times have lengthened slightly, shipping rates remain contained, and trade volumes stay healthy. Overall pressure is rising, though far below pandemic-era supply chain disruption.

Markets move in cycles driven by psychology; predicting turns is futile. Disciplined long‑term investing in quality businesses, valuing fundamentals over hype, helps preserve and grow wealth through booms and busts.

Against the backdrop of Middle East conflict, energy disruptions are lifting inflation expectations, pressuring stocks and bonds. Markets now price fewer rate cuts, though growth risks may temper inflation. From here, equities look more vulnerable than bonds overall for now.

A sharp divide has emerged beneath headline markets, with AI expectations driving a widening gap between winners and laggards. While infrastructure beneficiaries lead, software and other knowledge-based sectors face mounting pressure as disruption fears outpace observable change.

Amid rapid shifts driven by AI, changing market leaders and stretched tech valuations, we break down the forces steering today’s investment landscape. From gold’s standout run to a weakening dollar and renewed geopolitical debate, we show why staying disciplined and anchored in fundamentals is key to navigating 2026.

Despite President Trump’s pressure and a criminal probe into Jerome Powell, the Fed’s independence largely held. Market reaction stayed muted, legal limits constrain Trump’s influence, and any politicised rate cuts risk credibility, inflation, and broader financial instability for global markets ahead.

Since WWII, geopolitics split into East and West, but that model may fade. U.S. assertiveness contrasts Europe’s passivity, hinting at three major players. Outcomes remain unpredictable, investors should stay patient amid inherent market complexity and uncertainty.

Succession, when planned early and guided by strong values, ensures continuity and growth. At Rothschild & Co, we emphasize stewardship, transparency, and preparation to help families and businesses navigate transitions confidently.

Despite protectionism, conflict, and fiscal concerns, 2025 delivered resilient growth, falling rates, and easing geopolitical risks. Stocks soared, bonds rebounded, gold surged, and fundamentals strengthened, driving broad market gains despite dollar weakness and fragmented AI-driven momentum.

The 2025 Budget increases taxes on dividends, savings, and rental income while leaving capital gains unchanged. Despite headline noise, changes are moderate; investors should focus on stability and maintain a long-term strategy.

The UK budget offers offsetting tax hikes and spending increases, leaving the economy largely unchanged. Growth forecasts dip, inflation target slips to 2027, and later fiscal tightening remains modest.

In this Market Perspective, we examine resilient markets navigating geopolitical strains, sticky inflation, ambitious AI valuations, rising tariffs, and shifting debt dynamics, and why disciplined positioning and strategic agility remain essential for long-term growth.

Global equities surged since April, driven by AI stocks, sparking Dotcom-era comparisons. Unlike the 2000 bubble, valuations and leverage are milder. Yet, AI’s payoff may lag, leaving lofty valuations exposed to near-term revenue risks.

The 2025 Finance Act abolished the non-dom regime, increasing tax exposure. Former non-doms must reassess investment strategies, consider wrappers, review offshore accounts, and explore the FIG regime for potential tax relief and planning opportunities.

The TRF allows former non-doms to repatriate offshore income and gains at reduced tax rates, enabling UK investment. Rothschild & Co supports account setup, investment planning, and wrapper selection alongside expert tax advisers.

Companies with healthy cultures outperform peers, adapt to change, and deliver exceptional service. Preserving culture through growth ensures stability and continuity, benefiting both clients and the business itself. This Quarterly Letter explores how cultural strengths underpin our approach at Rothschild & Co and guide our investment decisions.

The US government entered a partial shutdown due to healthcare funding disputes. Economic impact depends on duration; markets remain stable, but worker furloughs and data delays pose risks.