Deutsche Bank One-Stop Outlook: 2026 Mid-Year Check-In
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Deutsche Bank's 2026 mid-year review provides a comprehensive assessment of global economic and market conditions. Global growth in the first half of 2026 came in slightly below expectations, with GDP expanding at 2.6% compared to 3.0% in the second half of 2025. This slowdown reflects the lagged effects of monetary tightening and persistent geopolitical risks, including the ongoing Russia-Ukraine conflict and Middle East tensions that continue to pressure energy prices.
Core inflation remains sticky at 3.2% year-over-year, with services inflation proving particularly resistant, keeping headline numbers above central bank targets. Looking ahead to the second half, Deutsche Bank projects a modest GDP recovery to 2.8% globally.
The report anticipates diverging central bank paths. The Federal Reserve is expected to cut rates by 25 basis points in September, with two additional cuts possible in 2027. Meanwhile, the European Central Bank is projected to hold rates steady through the end of 2026 due to more stubborn inflation dynamics.
Corporate earnings face pressure, with S&P 500 second-quarter profit growth at just 1.5%. The Treasury yield curve remains inverted, with the 2-year/10-year spread at negative 40 basis points, though Deutsche Bank assigns a higher probability to a soft landing. Emerging market performance is diverging, with Asian markets benefiting from China's recovery while Latin America struggles with weak commodity prices. Brent crude is expected to range between $75 and $85 per barrel, while gold surpassed $2,000 per ounce on safe-haven demand. The bank forecasts the dollar index weakening to 98 by year-end, with a S&P 500 year-end target of 4,500.