Investors appear to be facing a transformative cycle for capital markets and the broader global economy. An era of fiscal dominance will likely have repercussions for policy, deficits, and interest rates in major economies. Yield curves are steepening, market valuations are stretched, and economies are being reconfigured for structural growth. AI is likely going to drive productivity gains. Public and private markets appear to be increasingly converging.
As we assess the year ahead, PGIM’s Capital Market Assumptions, Outlook, and Best Ideas explore the far-reaching implications for economies, markets, and the opportunity set for investors.
Geopolitical rivalry is expensive. Record defense budgets, expanding industrial policy, and rising populism will likely compel major economies to run historically high deficits. Accompanying demands for low monetary policy rates erode central banks’ inflation-fighting credibility. Repriced term premia could increasingly determine the level of long-term rates.
Steeper yield curves, stretched market valuations, and reconfigured economies warrant diversified portfolios constructed for carry and income. The theme extends across the global fixed income and real estate sectors with varying methods of tactical implementation.
Best Idea
The Compelling Convergences in
a Credit Income Approach
The convergence of public and private credit sharpens the focus on how these assets may perform in an individual portfolio.
Best Idea
Global Living: Tapping into Structural Growth
Strains in housing provision remains a major theme but today's living markets represent a compelling opportunity; and real estate investors have a role to play.
The $7 trillion global AI-buildout threatens near-term over-investment risks. Yet, historical precedent suggests it will likley seed a productivity boost that determines growth trajectories, debt dynamics, and the future winners and losers across global industries and corporations.
As the delineation between public and private markets fades, expanding sources of capital can support borrowers’ credit profiles. As risk and return profiles converge, investors will likely benefit from assessing relative value across the public and private credit continuum.
Best Idea
The Compelling Convergences in
a Credit Income Approach
The convergence of public and private credit sharpens
the focus on how these assets may perform in an
individual portfolio.
Best Idea
The Case for Private Credit
Secondaries
Private credit secondaries are becoming increasingly
valuable to CIOs as a strategic portfolio management
solution that enables them to fine tune credit exposures
as market dynamics evolve.
Best Idea
Alts in DC: Innovating to Advance Retirement Security
The growing interest in alternative assets within defined
contribution plans reflects the shifting landscape of
retirement plans, as the use of defined benefit plans
continues to decline.
2026 Market Outlook
A new year may prompt investors to rationalize the
intersection of major secular forces with near-term
cyclical developments. Our Q1 2026 Outlook assesses
the impact of key themes reshaping the macro and
investment landscape.
2026 Best Ideas
With our 2026 themes in mind, PGIM’s annual Best
Ideas report explores some of the most appealing
opportunities for investors, leveraging our breadth
of expertise across asset classes to present a diverse
set of strategies for constructing more resilient portfolios.
Capital Market Assumptions
See how shifting economic conditions, divergent policies,
and valuations shape our 10‑year return expectations across
global equities, fixed income, real assets as well as securitized
and private market assets.
