Outrageous Predictions
Executive Summary: Outrageous Predictions 2026
Saxo Group
Read Saxo's Outrageous Predictions for 2026, our latest batch of low probability, but high impact ev...
You can access both of our platforms from a single Saxo account.
Inflation will be at the forefront of monetary policies from now on. It means bonds will continue to fall.
Althea Spinozzi
Head of Fixed Income Strategy
Summary: The bond market is telling us that inflation will drive monetary policies going forward. We expect 10-year yields to remain rangebound between 1.4% and 1.6% in the US until the debt ceiling crisis has found a resolution. In the UK, Gilts remain vulnerable to inflationary pressures as they enter a fast area, which could take them to 1.2%. The divergence between German Bund yields and the breakeven rates continues to widen, showing that rates have plenty of upside. Investors will find it troubling that US, UK, and European investment-grade corporates aren't not offering a buffer against inflation expectations. At the same time, US and European junk bonds offer a small buffer against inflation expectations of 1.45% and 0.9%, respectively. However, UK junk bonds are offering zero returns in real terms.
We believe that the selloff in the bond market is finally putting things into perspective: inflation will drive monetary policies going forward.
Inflation expectations are rising across the world, driving nominal yields higher. The move can easily be attributed to rising energy prices. However, we have reasons to believe that other elements such as shortages of both components and labour add to the risk of persistent inflation.
Regardless, what is becoming clear is that central banks will need to respond to avoid the economy from overheating. Tight monetary policies impact economic demand, but to what extent can they resolve supply chain disruptions? The answer to this question is complex. Yet, it's intuitive to conclude that interest rates hikes might become necessary as early as this winter. The later central banks will begin to hike interest rates, the more they will fall behind the curve risking even higher inflation.
US Treasuries
US Breakeven rates resumed their rise but remain below their May highs.
Therefore it’s likely to see 10-year US Treasury yields trading rangebound between 1.40% and 1.60% until a resolution for the debt-ceiling is found. Indeed, long-term Treasuries will serve as a safe haven as volatility in the money market increases.
UK Gilts
In the meantime, 10-year UK breakeven rates spike to 2008 highs, pushing yields to break resistance at 1.07%. Ten-year Gilts are now trading in a fast area, which could take them to 1.2%.
German Bunds
The divergence between ten-year German Breakeven rates and Bunds continue to widen, showing plenty of upside for Bund yields.
Ten-year German breakeven rates rose to the highest level since April 2013. It adds pressure for higher Bund yields, which we expect to turn positive by the end of the year.
Corporate bond real yields
Probably, the most troubling factor for Bond investors is that corporate bonds are not offering a buffer against inflation any longer.
Investment-grade bonds in the US, UK and Europe are providing returns below zero in real terms. Although US and European junk bonds provide a tiny buffer against inflation expectations, 1.465% and 0.95%, respectively, UK junk bonds provide near-zero real returns.
Latest Market Insights
Outrageous Predictions 2026
-
-
Outrageous Predictions
A Fortune 500 company names an AI model as CEO
Charu Chanana
Chief Investment Strategist
Can AI be trusted to take over in the boardroom? With the right algorithms and balanced human oversi... -
Outrageous Predictions
Despite concerns, U.S. 2026 mid-term elections proceed smoothly
John J. Hardy
Global Head of Macro Strategy
In spite of outstanding threats to the American democratic process, the US midterms come and go cord... -
Outrageous Predictions
Dollar dominance challenged by Beijing’s golden yuan
Charu Chanana
Chief Investment Strategist
Beijing does an end-run around the US dollar, setting up a framework for settling trade in a neutral... -
Outrageous Predictions
Obesity drugs for everyone – even for pets
Jacob Falkencrone
Global Head of Investment Strategy
The availability of GLP-1 drugs in pill form makes them ubiquitous, shrinking waistlines, even for p... -
Outrageous Predictions
Dumb AI triggers trillion-dollar clean-up
Jacob Falkencrone
Global Head of Investment Strategy
Agentic AI systems are deployed across all sectors, and after a solid start, mistakes trigger a tril... -
Outrageous Predictions
Quantum leap Q-Day arrives early, crashing crypto and destabilizing world finance
Neil Wilson
Investor Content Strategist
A quantum computer cracks today’s digital security, bringing enough chaos with it that Bitcoin crash... -
Outrageous Predictions
Taylor Swift-Kelce wedding spikes global growth
John J. Hardy
Global Head of Macro Strategy
Next year’s most anticipated wedding inspires Gen Z to drop the doomscrolling and dial up the real w... -
Outrageous Predictions
SpaceX announces an IPO, supercharging extraterrestrial markets
John J. Hardy
Global Head of Macro Strategy
Financial markets go into orbit, to the moon and beyond as SpaceX expands rocket launches by orders-... -
Outrageous Predictions
China unleashes CNY 50 trillion stimulus to reflate its economy
Charu Chanana
Chief Investment Strategist
Having created history’s most epic debt bubble, China boldly bets that fiscal stimulus to the tune o...