Wealth Insights
What to watch in the markets and economy in 2026

Article 12 min read Published February 6, 2026

Regions market commentators reveal key themes for the year ahead.

With the midterm elections approaching, 2026 is shaping up to bring changes that could impact both the economy and financial markets. To help clients navigate what lies ahead, Regions Private Wealth Management and Commercial Banking leaders hosted Economic Summits in Texas and Florida to share the major themes likely to shape the year.

The summit panel in Florida included Richard Moody, Regions Chief Economist; Alan McKnight, Regions Chief Investment Officer; and Borden Hoskins, Senior Vice President and Head of Regions Federal Government Affairs. Their discussion focused on the resilience of the U.S. economy despite significant geopolitical tensions and policy shifts.

What lies ahead for the markets

“There will always be some noise and some challenges. As investors, we always need to try to rise above that noise and not allow ourselves to fall prey to the daily 24/7 news cycle,” McKnight says. “When we think about 2026, we believe that the U.S. stock market may continue to perform well depending on economic conditions, and that idea of U.S exceptionalism in the stock market will prevail over this year.”

Emerging markets may also be a highlight this year.

“If you are investing internationally, the emerging markets could outperform developed markets, and that’s primarily from a growth component as well as a currency component,” McKnight says. “Fundamentally, we think the underlying themes within the emerging world are far better than those we are seeing in the developed world—places like the Eurozone and Japan versus the emerging world of India, Brazil, China and others.”

When it comes to fixed income, the picture is less rosy.

“Despite an enormous rally in the fixed income market—it was up over 7% just in core bonds last year—we think this year is going to be a little tougher,” says McKnight. “It's been more volatile. We don't think rates are going to come down demonstrably, and so we think it'll be a little more challenging for bond investors, but that you can still clip your coupon at the end of the day.”

2026 Capital Market Expectations | Regions Asset Management

Read this full analysis of what’s expected on the road ahead.

Forecast for economic growth

Moody explains that changes to the corporate and individual tax codes are likely to support growth in 2026 even in today’s “low-hire, low fire” labor market. Though some data from 2025 has been delayed due to the government shutdown last fall, he estimates that the U.S. economy expanded by 2.2% last year.

“We’re actually looking for faster GDP growth this year, at about 2.5%,” Moody says. “We do think the economy is settling into a more sustainable, stable pace of growth. … There is likely going to be a significant boost from fiscal policy this year with some of the impacts on business investment spending from the changes in the corporate tax code that were enacted last summer.”

Signed into law in July 2025, the “One Big Beautiful Bill Act” extends provisions in the 2017 Tax Cuts and Jobs Act among other changes that will impact businesses and individuals.

“We're expecting a significant boost in after-tax personal income in the first quarter of this year,” Moody says. “That is going to be a big support for consumer spending, particularly among lower- and middle-income households.”

Inflation and rate cuts

Moody sees limited room for further Fed funds rate cuts this year.

“We see growth actually picking up from where it was last year, with the unemployment rate remaining fairly stable and inflation remaining above the Fed's 2% target into next year,” he says. “Remember that the Fed has a 2% inflation target. We've not been at or below that target for almost five years now. So, the question is: Why would you cut the funds rate any further if the economy is growing and inflation is above your target?”

Rather than focusing on rate cuts, Moody believes investors should keep their eye on long-term Treasury yields: “Watch the long end of the yield curve, because that is where the bigger impact for the economy is going to come from.” The long end of the yield curve is critical because these rates directly influence mortgage rates, corporate borrowing and long-term economic growth expectations.

The pulse of the labor market

The other part of the Federal Reserve’s “dual mandate” is to promote maximum employment. “In terms of how we perceive the job market, firms are not hiring,” Moody says. “But part of that is because they can't find the workers. So, they're doing what they need to do in terms of bolstering productivity growth.” Part of that includes automation initiatives and adopting AI tools.

“Even though the pace of job growth is slowing, if the supply of labor is growing at a very anemic pace, it takes fewer jobs being added every month to hold the unemployment rate steady. Right now, we think the break-even case of job growth is as low as 40,000 jobs a month.”

Immigration policy shifts have also likely impacted the labor supply, as well as demographic trends in the U.S. that echo abroad. “This idea of the silvering of the globe and the reality that birth rates are going down in the developed world must be considered,” McKnight says. “In 1974, 5.5% of the global population was over the age of 65. Fast forward to 2074, that will be approximately 21%. That is a very different labor force.”

Domestic policy and affordability

The Trump administration is focused on affordability as the top domestic priority, especially as politicians prepare for midterm elections. Policy proposals include capping credit card interest rates at 10% and prohibiting institutional investors from buying single-family homes.

That second proposal came in the form of an executive order signed by President Trump in late January. It directs government agencies to implement measures to block institutional investors from buying more single-family homes to allow more first-time homebuyers to enter the market and increase affordable housing.

“That one will probably require an act of Congress,” Hoskins says. “For ideas like that, there’s a balance to strike. They want to create more supply in the housing market. They want to keep mortgage rates as low as possible. They also want to preserve the trillions and trillions of dollars in home equity across the United States. How will they accomplish all three of those things? The devil's going to be in the details.”

Watch for potential implications related to housing supply, regional real estate dynamics and consumer credit.

Geopolitical tensions

Recent actions on the global stage point to a more assertive and unpredictable U.S. foreign policy environment, which may influence markets in 2026.

“It’s interesting to look at Trump’s administration now and think about how he campaigned ahead of the November 2024 elections with a more isolationist policy,” Hoskins says. “The administration seems to be trying to find a middle ground between isolationism and intermittent interventionism.”

This has led to fast moving developments, including strategic negotiations and interventions. Moves such as the administration’s recent action in Venezuela and its bold approach to negotiations involving Greenland highlight a willingness to pursue U.S. priorities even when doing so creates friction. These dynamics may affect how organizations coordinate on security, trade and tariff decisions in the coming year.

Tariff policy remains particularly fluid, with levies frequently imposed, removed or renegotiated. A pending Supreme Court decision on tariff authority could further influence how the U.S. approaches international economic policy.

This somewhat volatile environment underscores the value of staying prepared for geopolitical surprises that may affect trade flows and commodity markets.

Digital assets and stablecoins

President Trump has said he wants to make the U.S. the “crypto capital” of the world, and last year’s stablecoin legislation, which establishes a federal framework for payment stablecoins, was a step forward in that goal. A stablecoin is a type of cryptocurrency designed to maintain a stable value by linking its market price to an external asset, such as the U.S. dollar.

Now another bill in this vein is making waves in Washington. “There are a lot of reasons why Congress is so interested in this topic: It's new, and it needs a bit of regulation,” Hoskins says. “If you listen to Treasury Secretary Scott Bessent, he does believe this is important to U.S. Treasury markets because stablecoins are largely backed by U.S. Treasuries.”

The U.S. Senate is tackling a market structure bill that would create regulatory authority over digital commodities, a major development for digital asset regulation. Expect 2026 to be an active year for Congress as it comes to grips with the reality of digital assets.

Opportunities ahead

As 2026 unfolds, the economic and policy landscape will continue to shift, but opportunities remain for well positioned investors. Regions Asset Management will continue monitoring these developments and helping clients navigate them with confidence.