10-YEAR STRATEGIC FORECAST

Capital Market Assumptions

November 2026  |  Expected returns, risk, and portfolio implications across public and private assets.

MARKET MOVES

What’s Changed

Relative to our March 31, 2026 forecasts, our long-term outlook for fixed income assets has improved significantly, consistent with rising underlying sovereign rates and relatively stable credit spreads. Our 10-year forecasts for equity markets decreased across regions as equity market advances resulted in less favorable valuations.

Table showing 10-year annual gross expected geometric return forecasts as of Q4 2026 and changes from Q2 2026. Forecasts are 5.9% for U.S. aggregate bonds, up 1.0%; 7.9% for U.S. long Treasury bonds, up 2.0%; 6.4% for U.S. high yield bonds, up 0.5%; 6.0% for U.S. large-cap equities, down 0.5%; 6.8% for international equities ex-U.S., down 0.4%; 7.0% for emerging market equities, down 0.9%; and 6.2% for a global 60/40 portfolio, down 0.2%.
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Table showing 10-year annual gross expected geometric return forecasts as of Q4 2026 and changes from Q2 2026. Forecasts are 5.9% for U.S. aggregate bonds, up 1.0%; 7.9% for U.S. long Treasury bonds, up 2.0%; 6.4% for U.S. high yield bonds, up 0.5%; 6.0% for U.S. large-cap equities, down 0.5%; 6.8% for international equities ex-U.S., down 0.4%; 7.0% for emerging market equities, down 0.9%; and 6.2% for a global 60/40 portfolio, down 0.2%.

Source: PGIM. As of September 30, 2026. Expected returns are forecasts, are gross of fees and expenses (which would reduce returns), and are not reflective of PGIM portfolio returns. Shown for illustrative purposes only. Forecasts are based on PGIM's assumptions, may not be achieved, are subject to change and are not a guarantee or reliable indicator of future results. Expected returns are annualized geometric returns over a 10-year horizon in U.S. dollars. Changes are shown in percentage points. Global 60/40 portfolio reflects a hypothetical allocation of 60% global equities unhedged and 40% global aggregate bonds hedged, rebalanced quarterly. This information is not intended as a recommendation to invest in any particular asset class or strategy. See the Methodology section and report for assumptions and calculation methodology.

2027 GLOBAL MARKET OUTLOOK

Explore the forces reshaping markets and the nuanced opportunities emerging across asset classes over the coming 12 months.

RISK-RETURN

EXPLORE 10-YEAR FORECAST RETURNS AND VOLATILITY

See how long-term gross return potential and expected volatility compare across public and private assets.

Scatter plot comparing 10-year expected geometric returns and expected volatility across fixed income, private assets, equities, real assets, and a global 60/40 portfolio. The global 60/40 portfolio has an expected return of approximately 6.2% at approximately 10% expected volatility. The chart shows a broad range of risk-return expectations across asset classes, with many private asset and equity categories positioned at higher expected return and volatility levels.
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Scatter plot comparing 10-year expected geometric returns and expected volatility across fixed income, private assets, equities, real assets, and a global 60/40 portfolio. The global 60/40 portfolio has an expected return of approximately 6.2% at approximately 10% expected volatility. The chart shows a broad range of risk-return expectations across asset classes, with many private asset and equity categories positioned at higher expected return and volatility levels.

Source: PGIM. As of September 30, 2026. Expected returns are forecasts, are gross of fees, expenses and, where applicable, carried interest (which would reduce returns), and are not reflective of PGIM portfolio returns. Shown for illustrative purposes only. Forecasts are based on PGIM's assumptions, may not be achieved, are subject to change and are not a guarantee or reliable indicator of future results. Expected returns are annualized geometric returns over a 10-year horizon in U.S. dollars; expected volatility is the annualized standard deviation of returns. Private market investments involve additional risks, including illiquidity, valuation uncertainty and, in some cases, leverage, and may not be available to all investors. Private market return and volatility assumptions are tied to those of comparable public market assets and assigns a premium consistent with historical empirical outcomes. Global 60/40 portfolio reflects a hypothetical allocation of 60% equities and 40% fixed income, rebalanced quarterly. This information is not intended as a recommendation to invest in any particular asset class or strategy. See the Methodology section and report for assumptions and calculation methodology.

METHODOLOGY

How PGIM Develops Its Assumptions

Macro Inputs

 

Establish the economic foundation through views on growth, inflation and real rates.

Asset Inputs

 

Translate the macro outlook into asset-level expectations for income, growth and valuation.

Council Review

 

Challenge and refine assumptions to ensure consistency across asset classes.

Portfolio

 

Apply the assumptions to inform long-term strategic asset allocation decisions.

FAQ

Borrowers are asking

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