PGIM explores how AI investment, geopolitics, inflation, and shifting rate dynamics are reshaping the global investment landscape. The outlook argues that powerful growth tailwinds remain intact despite rising downside risks, while a 40% probability is assigned to an overheating U.S. economy. Investors may need greater selectivity as traditional diversification becomes less reliable.
Global Market Outlook: A Tale of Tailwinds and Thicker Tails
PGIM
Research
16 Pages
Key Takeaways
Overheating Base Case: PGIM assigns a 40% probability to an overheating U.S. economy with 2.0% to 2.5% real GDP growth and inflation around 3%.
Higher Yield Regime: U.S. aggregate bonds yielded nearly 5% in May 2026, supporting more attractive long term return expectations than recent years.
Private Markets Advantage: PGIM projects 10 year returns of 9.1% for buyout private equity, 9.6% for venture capital, and 7.8% for direct lending.
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