Webinar Replay: 2026 Global Market Outlook

Ritu Vohora:

Hello, and thank you for joining us for the T. Rowe Price 2026 Global Market Outlook, “Minds, Machines, and Market Shifts.”

I’m Ritu Vohora, an investment specialist covering global capital markets. My role is to provide clients with a broad perspective into the views of our multi-asset, equity, and fixed income investors at T. Rowe Price, and I’ll be your host today, as we cut through the noise, exploring the impact from AI to fiscal policy and geopolitics and what this means for your portfolios.

In 2025, AI moved to a new phase. It’s no longer just a buzzword, but it’s driving real-world gains, fueling U.S. growth, and reshaping investment opportunities globally. But this transformation brings new questions. Are we on the edge of an AI-driven productivity revolution, or are expensive valuations a warning sign that we’re in a bubble?

How should investors balance the excitement of technological change with the realities of inflation, policy shifts, and geopolitical uncertainty?

We’ll explore how fiscal stimulus, evolving monetary policy, and sector rotation are creating both risks and opportunities. We’ll also discuss why discipline, credit selection, and agility are more important than ever for multi-asset portfolios.

To help us navigate these powerful cross-currents as we look ahead to 2026, joining me in the new  Baltimore studio today are Ken Orchard, head of International Fixed Income. Thank you for being here.

Ken Orchard:

Thanks for having me.

Ritu Vohora:

And a regular on these panels, Sébastien Page, head of Multi-Asset and CIO. Sébastien is also author of “Beyond Diversification” and “The Psychology of Leadership.” It’s great to be here with you again, Sébastien.

Sébastien Page:

Likewise. I’m fired up. I’m ready to go.

Ritu Vohora:

Great, looking forward to it. And also, with us remotely is David Giroux, head of Investment Strategy, chief investment officer, and portfolio manager. Thank you for joining us, David.

David Giroux:

My pleasure. Looking forward to the conversation.

Outside the United States, this is intended for investment professional use only. Not for further distribution.

 

Ritu Vohora:

So let’s start with the big picture. 2025 has been dominated by a constantly market narrative that’s been shifting. We started the year with a bit of panic. People were worried about U.S. exceptionalism, AI started to have questions around all this capex spending, and we saw some of those “Mag 7” start to lag on performance, particularly with concerns around competition from China. Fast-forward a few months, and we’ve gone from fear to frenzy. And markets, I think, now have held almost their best run in since the 1950s, so it’s been a phenomenal recouping of those losses.

So let’s start with a big question. What surprised you the most in 2025? And as we look ahead to 2026, are you bullish or bearish? Seb, maybe I can start with you.

Sébastien Page:

Oh, I start. OK, that’s an honor to start. The market’s resilience has surprised me. I like to do this thought experiment, Ritu, where I ask people, imagine that we’re in February 2022, and you short the stock market. And you fall into a coma. And then I usually go, OK, I wake you up today, and you ask me what’s happened since February of 2022—Russia invaded Ukraine; we had 550 basis points of Fed hikes; 9% inflation; we had the number two, number three, number four biggest bank failures in history; a war in the Middle East; and now the highest tariffs in 80 years. And guess what? The market is up 57%. So, that’s my answer. The markets have been incredibly resilient.

Ritu Vohora:

And surprising. Ken?

Ken Orchard:

Yeah, two things that are related. First of all, it is the big decline in realized and applied volatility this year, with all of the macroeconomic noise. We had expected there to be a lot of policy surprises, geopolitical surprises, etc. We got those, and yet the market just kept going down. I think the second surprise is somewhat related, it’s that we had so many central bank rate cuts, particularly the Fed cutting rates with core inflation over 3%. It’s been above their mandate for four years in a row now. Unemployment at only 4.3%.

Historically, that’s quite low, too, and the Fed cutting. That was a big surprise to me. I did not expect that, and I think that’s part of the reason why we’ve seen volatility decline so much.

Ritu Vohora:

Yeah, so certainly lots of unconventional things have happened, and we’ll dive into inflation and what we think on the outlook on U.S. growth. David, from your perspective, what’s been surprising to you?

David Giroux:

I think what’s been surprising is all the discussion around AI and the Mag 7. You know, what’s really beneath the surface of the market, and we talk about valuations being high, a lot of that overvaluation of the market is really not necessarily in the Mag 7. I think when you look at a lot of companies in the AI ecosystem, or Mag 7—Meta, Google, Amazon, Microsoft—all very, very reasonably valued companies today relative to their growth rates.

What has really not been reported and really not discussed a lot is, let’s call it the 300 companies in the market that are not under secular decline. They’re not part of the AI trade, and their valuations are about 15% to 20% higher than the rest of the market. This is GE trading at 45 times earnings. This is Walmart trading for 35 times earnings. This is Costco trading for 45 times earnings. This is Goldman Sachs trading for 2.5 times book value. You know, that underlying part of the market, let’s say 6% of the S&P 500 trading for very high valuations versus history, and I think that’s kind of a part of the story that has really not been told very much. It’s kind of beneath the surface, you know, it’s not, again, not gotten the publicity it probably deserves.

Ritu Vohora:

Yeah, that’s great, and I think that’s a great point to talk around the broadening that we see in the marketplace in some sectors that are very expensive but aren’t talked about. So staying with you, David, as we look forward to 2026, are you in the bullish or are you in the bearish camp?

David Giroux:

Honestly, I have no idea how 2026 is going to play out. We tend to take a five-year view. I think trying to predict what the market’s going to do in a one week or one month or even one year is very, very difficult. But on a five-year view, when we look at the equity market, we think returns in the equity market will be slightly below average. Our weighted average expected return for the market is about 7%, which, again, is probably a little bit below average. So below average, but not a horrible outcome.

Ritu Vohora:

OK, so still some opportunity. And Ken, from your perspective?

Ken Orchard:

I’m bullish on the macroeconomic outlook.

Ritu Vohora:

Wait a minute, this is fixed income being bullish? I mean, this is totally contrarian, right? This is contrarian right here.

Ken Orchard:

Well, I’m bearish on bonds, on interest rates, and if I have to be bearish on something, then I’m bearish on government bonds. But, you know, I’m bullish on the macroeconomic regime, and the fact is, we have a great setup coming into the year. We’ve had central bank cutting rates. Financial conditions are relatively easy. We have multiple governments around the world doing fiscal stimulus—U.S., Germany, Japan. And we’ve got energy prices that are relatively low. We don’t see any big imbalances in the economy at this point, and so it’s quite a positive setup going into next year.

Ritu Vohora:

OK, well, I’m sure there’s some risk. We’ll be under the surface that we’ll debate later on.

Sébastien, from your perspective?

Sébastien Page:

You know, I’m just going to combine the two views. I’m going to say I’m bullish on the macro, cautious on the valuations. Is that fair? The Asset Allocation Committee is neutral between stocks and bonds, so that’s where I am.

Ritu Vohora:

OK, that’s great. And let’s talk about what David brought up there, is the Mag 7 and AI, and we’ve had some pre-submitted questions. And by far, AI and all this capex spend has been top of mind for investors. And I think if we look in 2025, following all that capex we saw last year, we’re starting to see signs of monetization, we’re starting to see signs of real-world gains. But as you said, Sébastien, valuations have got very expensive, particularly in certain parts of the market. And I think these companies have an insatiable demand for growth, and we’re seeing some of them tap debt markets or even private markets for this funding, and that’s causing investors to get a bit more nervous. So, David, maybe I can come to you on this one. Are we seeing the setup for an AI bubble, if we want to use that term, or is all this capex sustainable value creation?

David Giroux:

I would say it’s a very difficult question. Now, I’d also say, anyone who tells you they know exactly how this is going to play in the next five years, because there’s a number of questions out there that are still unanswerable from my perspective. The scaling laws. Do we put more capex against training? If we put more capex, increasing levels of capex, does that generate a return that’s justified by the incremental capex when it comes to training models? We just don’t know that yet. Early evidence says maybe, but maybe not. So we’re still a little bit early on that.

The second question is really around models. Do models commoditize? If models commoditize, that puts a lot of downward pressure on the training side of the market, not on the inference side of the market. So those are two unanswerable questions.

But what I will say, to your earlier point, we are seeing clear evidence of monetization, whether it be on ad targeting, customer service, marketing, legal—very, very high, kind of—and coding, very high IRRs. You’re talking to companies today who are saying we’re a 5% top-line growth company. We used to grow our census by 2% to 3%, and now we think the next five years we don’t have to grow our census at all.

Big companies like Amazon are saying with double-digit top-line growth, we’re not going to have to add any new people over the next five years. That is a big change. And I would also say, as you talk to the cloud companies who are the epicenter of this, the Amazons, the Googles of the world, what they would tell you is, today, demand is outstripping supply. So that doesn’t necessarily have the makings of a bubble.

The one thing I think we should all be a little concerned about is OpenAI. OpenAI today is a company that has about $13 billion in revenue. They’ve handed out contracts worth about $1.4 trillion over the next, let’s call it, five to seven years. And the question is, will they be able to pay for that $1.4 trillion of contracts out there?

It’s the equivalent of a minor league baseball player who’s a top prospect going to a bank and saying, “I want to have a mansion.” And the bank saying, “yes, well, you know, even though you are still not earning a lot today, you will make a lot, and you’ll be able to afford that mansion down in the future.” It’s just a question mark, because if you look at other companies in the ecosystem, their capital spending is probably consistent with kind of the growth they see.

Even the competitors to OpenAI, the Anthropics of the world, are spending nowhere near the amount of capital intensity that OpenAI has. So can you have an AI bubble without OpenAI? Possibly. So when we do our forecast, our five-year AI forecast, our buildup of GPUs, we heavily discount some of those assumptions for OpenAI, and again, I know we’ll get into how to play AI in the future.

But I think some of the companies that are really dependent on OpenAI, whether it be an Oracle, we need to be a little skeptical, the core weeds. We need to be a little skeptical of that growth rates, their growth rates.

Ritu Vohora:

Thank you for that, David. And I guess the sustainability of all that capex in terms of turning it into profitability really matters, to your point, around ROIs. So how are you navigating it? You’ve talked there about maybe Oracle has worries, but areas like Amazon, Microsoft, some of the hyperscalers are some of the most profitable companies in history, right? They still have a lot of free cash flow. How are you navigating this next phase of the evolution in AI?

David Giroux:

Sure, again, it goes back to the point where no one knows exactly how this is going to play out. Even the smartest people from a technical perspective really don’t know how this is going to play out on a couple of the things I mentioned. So what you really want to do here is you want to think about where is the best risk/reward? Because we don’t know exactly. We don’t have a crystal ball of what the future looks like, so you want to play companies that have a business that even if AI were to fall off, or really slow down dramatically, that they have a core business that actually will continue to grow at a healthier rate.

So, think about the cloud providers, right? Microsoft. Amazon. Google. If AI really slows down dramatically, if training really falls off a cliff, they have core businesses that will continue to grow.

So that’s the kind of the way we are playing it. The AMDs, the Amazons, the Googles, the Microsofts of the world, those companies that have that kind of some existing business that help protect on the downside, as soon as you upside participation, and maybe have the underweights on the Oracles, the NVIDIAs of the world, the Palantirs of the world, where you have really, you have no downside protection from because your business is all AI, if you will.

Ritu Vohora:

Thank you for that, David, and I think what you highlighted there is the Mag 7’s often treated as one basket, but actually the fundamentals of the companies within that are actually very different, but to your point that those hyperscalers have good risk-adjusted returns, particularly around cloud and data services.

Now, another key concern, Sébastien, is around market concentration. You know, these are fantastic companies, they’ve had fantastic earnings. But they make up a big component of the S&P 500. And I know this makes it much more difficult for active investors.

So, from your point of view, and potentially the Asset Allocation Committee, how are you thinking about your allocation to the U.S. and AI more generally?

Sébastien Page:

Well, Ritu, concentration is not just high, it’s at an all-time high. Yeah. So when we look at markets in the Asset Allocation Committee, we’re struggling between high valuations, and I thought David was super insightful in talking about some of the large-cap companies that aren’t directly AI, that are trading at very high valuations. So we’re struggling between this tyranny of high expectations, I like to call it, and really strong earnings growth. I mean, we’re recording this around Q3, 82% beat rates, this is much above the last five-year beat rates, 13% year over year, almost quarter after quarter.

So, it’s on the one hand, on the other hand, I don’t like to sound like an economist, but high valuations, but there’s earnings growth there, and there’s sustainable margins. So, the Asset Allocation Committee ends up being neutral between stocks and bonds, long diversification, which I’ll explain, and short duration. Ken, we’ll agree with you that there’s potential upward surprises in inflation and rates.

But the question that we get repeatedly and that David addressed, in part—are we in a bubble? Look, there are signs of speculations. David talked about valuations and analysis from the bottom up. Let me just summarize how this ends up looking from the top down. Stocks are up 35% in five months. The price/earnings ratio’s at 23. The price-to-sales ratio is higher than it was during the dot-com bubble. The price-to-book ratio is higher than it was during the dot-com bubble. The dividend yield’s at 1.2%, it’s close to where it was during the bubble, market concentration, which is at an all-time high. The Goldman Speculative Trading Index is trading similar to 2021 in the tech bubble. I mean, do you want more? Like, there are signs of speculation. Memes and SPACs are back. What’s interesting, though, is that we see signs of speculation, of course, in private markets as well.

David talked about OpenAI and trying to reconcile the map around their investments. Ritu, I went to Palo Alto recently. And interestingly—I’d never been to Palo Alto before. It’s the birthplace of Silicon Valley, the epicenter of Silicon Valley. I learned a few things. First of all, I was the only person wearing a suit. You don’t wear a suit in Palo Alto. It’s where the tech culture is. The coffee’s much better for some reason, I can’t understand why. I was speaking at a dinner for founders, CEOs of startups. And in the middle of networking during that dinner, it kind of dawned on me that probably half the people in that room were billionaires, at least on paper. And in fact, a person presenting to me on the panel, was in their late 20s, had launched a company, AI-related, computing-related. And I kind of asked him after the talk, hey, just how much your company worth? And he looked at me very serious, matter of fact, $4.4 billion. So I went back and looked at how many billion-dollar startups we had 10 years ago—unicorns. 123. And then I used AI to figure out how many we have now. I think it’s accurate, because I double-checked. It’s 1,500. Wow, right?

So, there are signs of speculation. But I want to go back, though, to fundamentals. Fundamentals are positive. Aswath Damodaran is an academic, and he’s a very credible voice on top-down valuation. And he was on CNBC a few weeks ago, and he refused to use the B word. He said, I refuse to use the bubble word. And a very straightforward justification: Fundamentals remain quite strong.

So, we have to recognize, also, how David explained how some large-caps are showing signs of high valuation, and I like how he’s pointing that out, just like David can do, which is no one’s looking at that or talking about that right now.

But also, not all stocks are trading near historical high valuations. This is kind of obvious, but counterintuitively, if you look at the MSCI All Country World Index equal weight, so just like the average stock in the world, it’s trading a price/earnings ratio of about 15 on 12-month forward. Its long-run average over 30 years is 14, right? So this speaks to small- and mid-cap valuations. S&P Equal Weighted is actually near its 10-year average valuation.

So small-caps, health care stocks, international value stocks, they’re all trading near historical averages. So we do have a barbell in the valuation, and that’s why—circling back to my original answer—that’s why we’re long diversification.

Trees don’t grow to the sky. There’s going to be a moment where this market concentration starts to unwind.

Ritu Vohora:

And I think, to your point, maybe we talk about irrational exuberance. Maybe for now it’s rational for companies that have the strong fundamentals, but at some point, they will start to roll over. But it’s great to hear about diversification, and we can delve into that a bit later.

So, Ken, coming to you now, we’ve talked about it from an equity perspective, but as I mentioned, a lot of these companies are now starting to tap into debt markets, private markets.

Ken Orchard:

Yes.

Ritu Vohora:

How are you thinking about this? Can debt markets support this insatiable demand for capital?

Ken Orchard:

Yeah, the fixed income markets are struggling to work out what this means. There has been a very large and rapid increase in issuance from AI-related companies just in the past six months or so. But, you know, many of these companies are starting from very low debt loads. So a company like Meta, it had $30+ billion in debt at the start of the year, and now if you add in everything that they’ve issued across various platforms, it’s maybe $80-something billion. So, it’s a pretty big increase in percentage terms, but it’s not really that big for a company the size of Meta. Oracle is perhaps the one exception here as a company that started out with debt levels that were already quite high, and the market has reacted to that. We have seen some spread widening. In general, though, across all of TMT, we haven’t seen a big impact on corporate spreads. Next year, the market is forecasting that investment-grade issuance is going to go up by about 50%.

And most of that is going to be driven by AI-related capex. It’s TMT, it’s utilities, etc. The market knows that’s coming, and that may be one of the reasons why we’re seeing a little bit of upward pressure on spreads right now, but I think the market, as I said, is still working out what this means. From the macro side. I don’t believe that economists are fully baking in all of this capex into their economic forecast for next year. It’s big enough that it is going to have an impact on overall GDP growth.

Ritu Vohora:

It’s already impacted, right, in the first two quarters this year, I think it was 1% that it added to GDP.

Ken Orchard:

Yes, yes, and so that should mean tighter monetary policy, slightly higher growth, slightly higher bond yields, slightly higher inflation. And I don’t believe that that is baked into the macroeconomic views for next year yet.

Ritu Vohora:

OK. Because, I mean, a lot of AIs talked about the productivity gains we’re going to have, the huge deflationary impact it’s going to have, but also the labor market impact. What are your thoughts on that?

Ken Orchard:

There’s probably, yes, more focus on that. I heard somebody mentioning that on TV this morning, the deflationary impact. Look, I think it’s really hard to tell how fast this is going to play through. If you look at big productivity developments that took place in the past, historically—railroads, electricity—it took decades for these to play out.

We’re assuming that AI is going to have a big impact on productivity in two years, three years. Maybe. It seems very quick to me.

Ritu Vohora:

I expect it may be more efficient.

Ken Orchard:

I think it’s probably going to take longer.

Ritu Vohora:

And I think it depends on the type of technology. I know for information sectors, that’s where we’re seeing the biggest change in terms of things like CoPilot and ChatGPT, but of course, other sectors that AI can then impact, really, productivity gains is some way out.

So, Seb, I want to come to you now on the broader view on the U.S. economy. So, we’ve talked about the impact of AI on the economy, but also we have cross-currents around policy, right? We have tariffs, we’ve got fiscal policy from the One [Big] Beautiful Bill. The Fed is in a difficult place where they cut rates. We’ve got a new Fed chair next year. They’ve got a difficult tightrope to walk. How are you thinking about inflation, growth, and monetary policy? It’s a loaded question.

Sébastien Page:

Yeah, you know, I really enjoy talking about macro, but every time I do, I think in the back of my head about something I learned from David Giroux, which is the way the macro feels right now is not the way the macro’s going to feel six months from now. And also, as another caveat, before I go on and just talk about macro, a client reminded me of this. I was in Australia making a presentation, and I thought I made a nice presentation about macro, and we’re talking over cocktails, and he looks at me, and he goes, “Great presentation.” And then he goes, very serious, “You know none of this matters.”

So sometimes markets divorce from macro, and part of it is the timing that David often talks about. But, all that being said, let’s talk about the macro, right? Let me give you the bearish frame, because right now, no one’s really being bearish. You don’t hear a lot of bears in the financial media, but interestingly, there are at least four historically powerful indicators of recession that are flashing red. I’m going to give you the four indicators if you want to be bearish, but then I’m going to tell you why—I hate to say this time is different, but why in the immediate future they might not drive the economy off a recession.

Number one, unemployment is up by 90 basis points. This is a recession indicator. There’s no time in history where unemployment accelerated like that that didn’t end in a recession. Traditional recession indicator.

Number two: The yield curve was inverted, it’s disinverting. We know that is typically, has not been recently, but an indicator of recession. If you use traditional economics. In fact, it’s so good, people like to say that the yield curve predicted 12 out of the last 10 recessions, right? A couple misfires.

Number three traditional recession indicator: Manufacturing is in a recession. Manufacturing is contracting. PMIs right now are reading at about 49, they’ve been persistently below 50 for three and a half years. Even though manufacturing’s only, like, 10% of the economy, it’s typically a leading indicator of recessions.

Number four indicator of recession, historically: housing activity. Housing activity is basically at a 10-year low and historically would be an indicator of recession.

So, there are arguments based on traditional economics, historical indicators to say, hmm, maybe we’re headed towards a recession. Some have worried about the impact of tariffs, but again, you have to look at the size of imported goods relative to total GDP, it’s actually just 8%. So thinking that tariffs are going to drive the entire economy might be a little bit misleading.

So, Ken, are we bearish now? You know, four traditional recession indicators on the macro side. Now, let me give you the bullish side of the macro side, which is where I stand right now, to be clear. The Fed is easing 100 basis points, potentially, by the end of next year. There’s stimulative fiscal spending. We’re running pedal to the metal on fiscal. 7% of deficits. Deregulation, M&A are finally picking up. We thought that would pick up earlier, but are finally picking up.

And, look, the higher-wage consumer remains strong. The top 10% of wage earners represent about 50% of aggregate spending, and those consumers own stocks, typically, and so there’s a wealth effect.

Unemployment, even though it’s accelerating. It’s at 4.3%. The long-run average is 5.7. So we’re actually at a fully employed economy, which is good for consumption.

And then AI capex, of course, it’s accelerating. It’s accelerating. We had a moment earlier in the year where we had maybe a shock to the AI theme. We’ve almost forgotten about it. It was a model that was built out of China, an LLM, DeepSeek, that basically showed, look, I can do this for cheap, I don’t need all this compute, why are we building all these massive data centers?

And that lasted for five seconds, because Mark Zuckerberg and others just said, hold my beer, we’re going all in on AI, we’re going to increase the investments another 80%. As we record this, there’s a Wall Street Journal article over the weekend where a private credit manager says, when you start talking about a trillion-dollar investment in two years, at that point, you kind of stop counting, right?

So this is where we are in terms of AI spending, not slowing down. Corporate earnings growth remains strong, 10%, 12%, Q1, Q2, Q3 again. And interestingly, at least retail surveys show that investors are not that bullish, which is typically a contrarian indicator.

So, I’ll just end with this on the macro. The Atlanta Fed GDPNow, which is a Nowcast, tries to take all the data as it gets published, and we know we don’t have all the data right now because we’re unwinding the shutdown. But the GDP Nowcast is at 4% growth for this quarter, and it’s actually trending up, not down.

OK, so let’s say it’s 4% growth, I don’t know, but let’s say we get 4% growth for the next 6 to 12 months, and we know inflation is actually picking up, it’s running at 3.6% last three months. Let’s say it’s 3.5% inflation.

That is 7.5% nominal growth.

That is higher than any annual nominal growth number printed between the great financial crisis and COVID.

So the macro’s looking just fine. And I’m again reminded of what David taught me, which is that the way the macro feels now is not the way the macro’s going to feel later. But now, it feels fine. These positive macro trends and fundamentals, you know, they could fail to meet expectations.

That’s the problem.

Ritu Vohora:

It seems like we’re past peak bearish now on the macro side. But you mentioned there the fiscal side, right? In the U.S., it’s 7% of GDP.

David, I want to come to you now, because I know you’ve mentioned this is a risk for markets that we need to be mindful of. When I look at both private and corporate balance sheets, they’ve deleveraged over the last decade, but governments have been on this massive debt binge. We see it here in the U.S., we see it in the UK, Europe, are all going to increase their deficits. How worried are you about fiscal sustainability? Surely that’s a macro risk we need to be watching.

David Giroux:

It is. It’s probably the greatest macro risk. The question is, when does that risk manifest itself? The analogy I’ve used in the past is we are driving a car, in the developed world, towards a wall at very, very high speeds. We don’t know when we’re going to hit the wall, but we will hit the wall. You said 7%, or it’s actually closer to 6% right now, but you could paint a picture over the next five years if some of the tariffs go away, if it gets struck down by the courts, if some of the spending that’s in the [One] Big Beautiful Bill kind of doesn’t get…some of the cuts don’t actually happen. You’re right, you can get to a point where you’re at 7%, or even potentially 8%, in the future years. That’s just an unsustainable level. So that is a reason to be very, very bearish on bonds, especially at the long end of the curve. That’s clearly a reason.

The only thing, the countervailing issue, and I might just disagree with Ken on this one point, is what is the impact AI is going to have on unemployment rates? And what does that do for Fed policy? Because I don’t think this is a question five years out.

We are already seeing a disruption in hiring in the tech sector. We are already seeing a disruption in hiring for marketing professionals. We’re seeing a disruption in hiring for younger people. We are seeing a disruption in a variety of areas. IT professionals has an unemployment rate that is 100, or actually, I think 200 basis points higher than the national average today, which you’ve never seen before.

So, and again, when we talk to companies on the micro level, they’re telling us, I wasn’t a gross census 2%, 3%, 10%, and now I’m going to be flat. So I think what does that do to the Fed policy if you have something we’ve never seen before.

What happens if unemployment rate goes from 4.3, as Sébastien highlighted, to 5.3%, or 6%, in a period of still strong GDP growth? You don’t usually see that. So we have these two countervailing issues on rates.

What is the downward pressure on rates because of Fed policy, because if unemployment rates rise? And this other issue around these unsustainable deficits that in the next 20 years is going to hit us sometime.

And which one of those is more important? I don’t think anyone knows, per se, which one of those is going to be a bigger issue impacting rates over the next three to five years or the next five or 10 years. Some of the AI discussion is kind of lost. People say, well, unemployment’s going to go to 25%, we’re all going to be on basic income.

A move from 4.3% to 5.3% or 6% has huge implications for Fed policy, huge implications. And again, I don’t think anyone knows. We spend a lot of time trying to understand which of those is more important, and I don’t think anyone really knows.

And so I think that is, again, we’ve made the argument, probably similar to other people, that we want to be in that belly of the curve, where if rates drop, you get some upward participation in bond prices, right, if rates drop. But you won’t be in the long end of the curve, necessarily, because if the market’s really, really worried about rates or fiscal sustainability the 10-year or the 30-year is going to take the brunt of that pain. So again, we tend to be more in that five- to seven-year bucket, and that’s been the right place year-to-date. I think that’ll probably be the right place over the next three to five years. That risk/reward in the market is, again, what we focus most of our time on.

Ritu Vohora:

OK, thanks for that, David. It sounds like timing really matters, and I know the Fed has talked about reducing QT, and in fact, we had an audience question: Does this mean more demand for U.S. Treasuries, which actually pushes yields lower? And also, if they issue T-bills on the shorter end rather than the longer end, then maybe yields don’t go up as quickly.

So, Ken, how are you thinking about this? And I know you’ve been positioned short duration, but given what David’s talked about now as well, how are you thinking about your fixed income allocation?

Ken Orchard:

Yeah, so our concern, looking into next year, is that we’re expecting growth to be quite resilient, we’re expecting inflation to be relatively high, and the Fed could get cold feet. It may think that it doesn’t want to cut as much as the market has been pricing in, and we’ve started to see some of that play out over the last five weeks. The Fed said at the last press conference that they weren’t sure if they were going to cut, and we’ve heard a lot of people come out and say the same thing.

So our concern is that there’s a lot of cuts priced into the curve over the next 18 months or so. The market is assuming that inflation is going to come down, that the neutral rate in the U.S. is 3%, and therefore the Fed is going to gradually migrate down to that. But there are obstacles in the way. There are reasons to expect inflation to remain somewhat sticky.

Longer term, I agree with David that there’s a risk that if unemployment keeps going up, the Fed is going to cut. You know, they do have this dual mandate, and we could actually have this situation where the Fed is goosing or is pushing more on the financial economy in order to try and cope with the fact that AI is hurting the real economy.

And the fact is that cutting interest rates may not actually stimulate a lot more GDP growth. GDP growth will still be relatively strong anyways, but they keep cutting because they’re trying to focus on the labor market, and it doesn’t work.

That leads to a steeper curve, so I agree with David on that point. You’ve got very large budget deficits. The government’s trying to tackle the economy from that side by running greater fiscal stimulus.

Fed’s trying to tackle it by cutting rates, but that should lead to lower rates in the front end, higher rates in the back end.

Ritu Vohora:

Really managing that duration is critically important. You mentioned there inflation continues to be a risk. I know it’s been moderating, but there are upsides now, whether it’s from tariffs or AI with all this spending. Sébastien, how are you thinking about inflation protection from the fiscal side, but also inflation in your multi-asset portfolios?

Sébastien Page:

There are a few factors that point towards sustained inflation pressures. Let me give you a few arguments for why inflation risk might be to the upside. And I look at this as a risk management question.

I don’t think we’re going back to 8%–9% inflation, but I just look at the symmetry of the risk relative to expectations. In my mind is that the risk is more to the upside than the downside.

Wages are still growing at 4%, so that’s hardly consistent with 2% inflation targeting. There’s a housing shortage of 5 million to 7 million homes in the U.S. that can create stickiness in shelter inflation.

Commodities always remain unpredictable. As an asset allocator, I’ve said many times, commodities are perhaps the hardest asset class to predict, and now they’re driven by AI’s energy demand as well. Tariffs, we think, our economist, Blerina Uruçi, thinks maybe it will add as much as 100 basis points, at least temporarily, to CPI. CPI is running at 3.6% for the last two or three months of data we have.

And then, add on top of all of this, Ken, on top of everything I just said, add all-time high financial markets, all-time tight spreads, and what is the Fed doing? Cutting rates. The Fed is easing, right? So, that’s where we are in an environment where you probably want to hedge upside surprises and inflation. You can do it in many ways. I know our audience is global, so linkers, we call them linkers, right, or TIPS. Shorting your duration. David talked about the belly of the curve and not necessarily being long the ultra-long bonds. There are many ways you can short duration. Being long credit is an indirect way of shorting duration.

The other thing we like to do in our asset allocation portfolio is to overweight now our real asset strategy. These are stocks that react really well to positive inflation shocks. It’s a diversified portfolio. You have metals and mining, energy, real estate, inflation-sensitive equities. This is great because it keeps you in the market in an area that’s pretty, in my mind, undervalued, so you get the equity tailwind over time, but also a nice response that you can expect from these inflation shocks.

Ritu Vohora:

So a lot of those value sectors you talked about, again, the case for broadening or diversification.

So now I want to come back to you, David. Your strategy is, I’d say, countercyclical. You tend to lean in when the market’s panicking, and I think you did that this year, right, during Liberation Day when the markets were panicking and people were selling, you were actually leaning in and adding to your equity position. So for our investors, it’s very difficult when things are going wrong to feel comfortable making such a bold decision, and it doesn’t feel good.

So how can investors navigate the noise? What should they be focusing on?

David Giroux:

Well, let me just say, if I had one message to investors, always, is when the market goes down, the forward returns, 12 months, 36 months, are actually higher. Actually, when markets feel really good and the macro feels really good, that’s usually not a great time to be taking a lot of risk.

What I would tell people is, we talk a lot about markets. We talk a lot about the stock market, small-caps, mid-caps, large-caps, but the reality is we don’t invest in markets. I don’t invest in macro. I invest in the 60 best equities from a risk/reward that we can possibly find in the marketplace, right? And I think a lot of other investors at T. Rowe follow the same strategy. So, there are parts of the market today that are extremely overvalued.

But at the same time, there’s a number of stocks in the marketplace that all have very attractive risk/rewards. You know, parts of health care, parts of utilities. Things that are out of favor today, but have very, very attractive business models, whether that be parts of the software that have kind of been left by the wayside, even though they have very, very good fundamentals.

Again, we’ve talked a lot about markets, but again, we’re not investing in 500 companies in my strategy. We’re investing in the 60 best equities, we’re making big bets on those stocks.

And then to Sébastien’s point also, if you think about a fixed income portfolio today, if you’re really worried about inflation, one of the asset classes that both I invest in and I think the Asset Allocation Committee does as well, is leveraged loans. Leveraged loans are capital-to-capital structure, they’re floating rate in nature, and if the Fed does not cut rates as much as the market thinks, which is, I would agree with leveraged loans provide a very attractive way to play this inflation surprised on the upside. Leveraged loans, you know, are a great asset class to play there.

Ritu Vohora:

OK, thank you for that, David. So it sounds like looking for those contrarian opportunities that are often overlooked, so areas like utilities, health care, and leveraged loans.

Sébastien, I want to come to you now from a question we’ve had from the audience. We’ve started to see a broadening of performance within the U.S., whether it’s from tech into areas like utilities and health care, but also beyond that, internationally. Now, many investors are struggling over where and how much to allocate outside of the U.S. To David’s point, the market rally can continue. They don’t want to take their chips off the table and it continues to rally, because in fact, I was looking at the data. If you looked at the tech bubble, the NASDAQ’s four-year return, 50% came in the last year. So if you’re on the dance floor, you don’t want to leave too soon. So what should investors do?

Sébastien Page:

Earnings growth is converging, even in the U.S. The spread a couple quarters ago between the Mag 7 and the 493 was about 20% difference in earnings growth, and now it’s down to 7% or 8%. And we’re looking at a similar trend between non-U.S. stocks and U.S. stocks. A couple months ago, before an Asset Allocation Committee meeting, I sent a note to an analyst, and I asked for a dashboard of non-U.S. stocks compared to U.S. stocks. It was the MSCI All-Country World Index, including emerging markets, ex the U.S. versus the Russell 3000.

So, Ritu, I start looking at the numbers. And something looks off outside the U.S. The earnings growth numbers are 2% higher than in the U.S. The ROE’s 5% higher. The margins are 5% higher outside the U.S.

So I don’t yell at analysts ever, right? But I’m getting ready to ask that analyst politely why the data is wrong, and it turns out the data was correct. However, it was compiled based on median numbers. So, to get a median return on equity, for example, for stocks outside the U.S., you would rank them by their return on equity, and then you would go to the middle of that ranking.

This speaks to opportunities in small- and mid-caps, and ultimately in value in stocks outside the U.S. with better fundamentals than their counterparts in the U.S., and cheaper valuation and converging earnings growth. So the Asset Allocation Committee, for example, has been long international value stocks, and we maintain that position.

So when I said earlier we’re neutral stocks, bonds, but we’re long diversification, that is one way that we are long diversification. However, before I end my answer, I am not calling for the end of U.S. exceptionalism. I think the U.S. technology innovation is awesome and is going to continue, but from a 6- to 12-month ahead perspective. We are holding U.S. stocks, but at a lower proportion than we normally would relative to non-U.S. stocks.

Ritu Vohora:

So keeping our chips on the table, but just diversifying a bit on the edges. So coming to you, Ken, now, when I think about emerging markets, they’ve been in a pretty good place. We’ve actually seen more tariff resilience than maybe people thought, but also from an inflation and debt perspective, unlike the West it seems to be under control.

Ken Orchard:

Yes, many countries.

Ritu Vohora:

Are you seeing opportunities in fixed income within emerging markets, particularly when we’re thinking about the hunt for yield? Is that where maybe the contrarian opportunity is?

Ken Orchard:

Emerging markets have done very well this year, and we have participated in that performance in our fixed income strategies.

Short term, we have turned a little bit cautious, just given the extent to which they have moved and the level of bullishness that is there. For example, we have seen emerging markets credit outperform U.S. credit over the past month. So that relative value in the short run does look like it’s slightly stretched.

Longer term, structurally, I’m bullish on emerging markets, and I’ll tell you why. This macroeconomic regime that we’re in currently is very good for emerging markets. We have very easy financial conditions. Most of the developed market central banks are cutting rates. We’ve got fiscal stimulus. Energy prices are relatively low, and yet commodity prices in many of the commodities that emerging markets produce are stable to even higher.

And positioning is still generally underweight, although we have seen now many people on the margin move a little bit into emerging markets. We’ve yet to see any wholesale asset allocation shifts into emerging markets like we did, say, back in 2005 and 2006 or in 2010, so people are still generally underweight.

And that means there is the potential for a virtuous circle to form where you have more capital flowing into emerging markets, which then causes their currencies to appreciate.

Yes, that’s helped, and then that improves the fundamentals, and then that causes more capital to flow into emerging markets, and so you can have these multiyear cycles where emerging markets do very well, and I am optimistic that that is going to develop exactly where in emerging markets we’re investing.

We like the barbell approach, and so we’ve been more focused on, first of all, some of those very high-quality countries that you mentioned that actually have better macroeconomic policies than we’re seeing in the developed countries. They’re running tighter fiscal policy, they’ve got better monetary policy, lower inflation. So, for many of the countries we see in Southeast Asia, Malaysia, India, Indonesia, those countries, their currencies are quite stable, and their rates markets are doing very well, their government bond markets are doing very well.

Then on the other side of the barbell are what we often call the frontier markets. So these are places like Egypt or Nigeria, Turkey. Those countries have also done very well this year. Their currencies are appreciated. They’ve got very high local interest rates. And so if we buy a little bit of those and we leave it unhedged, then you can get incredibly attractive returns. Egyptian T-bills in the past year returned around 30 percentage points. Wow. You said fixed income was boring. Yeah, so compare that to equities. And so we think if we combine those two together, of each side of the barbell, you’ve got the low risk and the high risk, well then, you’ve got a very attractive return package.

Ritu Vohora:

OK, so back to that diversification point, even in fixed income, go global. We’re almost at time, looking where we are, but I have one question from the audience on the dollar.

The dollar’s been on a slide, I think it’s down 8% year-to-date, and I think a lot of investors, when you look at your returns, they’re flattered by a weaker dollar, depending where you are. But do we think that’s structural or cyclical? Maybe Ken, I can stick with you on that one.

Ken Orchard:

So I think the moves this year are cyclical. As we talked about, we came into this year with these great hopes around U.S. exceptionalism. And in reality, the U.S. growth was good, but it didn’t quite live up to the hype.

And as a result, the Fed’s cutting rates, interest rate differentials between the U.S. and the rest of the world declined, and the U.S. dollar went from a very high valuation point to now it’s still high, but not quite as high.

Longer term, it’s difficult. Today we are nervous U.S. dollar bulls. We are long U.S. dollars, we think that the setup into next year for the dollar is actually quite nice, given that acceleration in growth and a Fed that is a bit more on the fence.

However, longer term, the U.S. dollar is still very expensive. And that is being held up by the fact that there’s a lot of foreign capital that’s flowing into the U.S. The U.S. has a big current account deficit, it has to be financed every year. It’s about 1% of global GDP, a little bit over that, that needs to flow into the U.S. every year just to finance the U.S. current account deficit. I think foreigners are happy to do that as long as U.S. equity returns are high and U.S. interest rates are high.

But at some point in time, that could shift, and then the dollar has a lot of room to decline.

Ritu Vohora:

We’ve covered a lot of ground, so as we come to a close, I just want to wrap up. I think, broadly, we were quite constructive on the macro. I think a lot of the risks we were worried about at the beginning of the year seemed to have abated, at least for now. But as we look ahead to the next, call it six to 12 months, what is the risk the market is not pricing? What keeps you up at night? David, maybe I can start with you.

David Giroux:

You know, what I would say is 99% of what we do is micro, and 1% is macro, so I’m not spending worry tonight about debt policy or AI bubbles. I’m very, very focused on those 60 companies and what’s going on in their fundamentals, and that’s what we’re really focused on. What is the growth rate? What does the model look like? What does the IRR look like?

I think we put way too much weight as investors on macro. I think, again, as Sébastien said earlier in the discussion, the macro mining has not been great over the last three or four years, and yet equity returns have been wonderful, because the micro has been so powerful.

So, again, there’s nothing I would highlight that I’m spending any time on, on a macro perspective. I’m very, very focused on the micro.

Ritu Vohora:

That’s great, and I think that’s very reassuring for investors who are trying to navigate a constant barrage of data that keeps changing almost daily. And as we approach the festive season, David, what’s in your stocking filler? You mentioned earlier areas like health care, utilities. Where do you think the most exciting opportunity, whether it’s over the next 12 months or five years, depending on your horizon?

David Giroux:

You know, I think there’s a variety of idiosyncratic, really attractive investment opportunities that we think can generate mid- to high-teens returns. We’ve talked about publicly in the past that utilities are still today trading at a discount to staples.

Utilities growth rates, because of AI and a variety of other factors, their growth rates are inflecting positive. Staples are going the other way. So I always tell people, one of the easiest trades to do in the market, one of the easiest arbitrages is to go long utilities, the right utilities in the right states who benefit from AI, whose growth rates used to be 5% now are 7%, 8%, 9%, in some cases even double digits, with, in some cases, 2% to 3% dividend yields, that are trading at a discount to the market, with very little FX risk, very little regulatory risk. That is a really attractive place. And underweight staples, who have a variety of headwinds, from a weak consumer at the low end, which may be structural over time, potentially companies that have GLP-1 risk.

Ritu Vohora:

That’s great, and I think, given the concentration we’ve talked about in markets and the dominance of AI, successful active management is finding these little gems that are flying under the radar.

Seb, coming to you now in Baltimore here, what are your thoughts on the biggest risk and biggest opportunities?

Sébastien Page:

What was keeping me up at night? Our head of fixed income, Arif Husain, said recently, no, we’re not in a bubble. We’re in a balloon. And I think his point was you can inflate the balloon more than a bubble. Maybe it’s semantics. But what’s keeping me up at night is the asymmetry in market opportunities, given where we are, where it’s starting to feel balloonish or bubblish.

I like how David talked about looking for stocks that will benefit from the AI theme. But they’ll do OK if the AI theme implodes or there’s a correction. I think of how we talked about inflation, again, asymmetry. You want to be short duration, prepared for this asymmetry and the risk, but through portfolio construction, where you’re going to be doing just OK, you’re going to be doing OK if inflation actually comes down. So I think of asymmetry a lot. I want to participate, we want to participate. So I like, for example, hedged equity strategies, where you get a portion of the upside, but you’re actually hedging the downside. From an asset allocation perspective, I think those strategies are interesting. So I think this will be my takeaway: 2026, position for asymmetry.

Ritu Vohora:

That’s a great way to end on. Ken?

Ken Orchard:

So I agree with David in terms of macro events. That’s not something that we typically play. There’s not very much that’s really worrying me right now. Perhaps I’m worried a little bit if the Fed doesn’t cut in December, January, that that could be taken out of the market, because the market’s expecting it, but ultimately, don’t think it really matters that much. What we are thinking about for next year is we want to have lots of short duration credit, so things like loans, as we talked about, but also short duration securitized credit, we think, is attractive.

We want to be outside of the U.S., we want on things like emerging markets, and we also want to be long inflation. So, TIPS in the U.S., but also inflation linkers in Europe, Japan. Those are still priced at a fairly low rate of inflation around the world, and so they do offer some attractive upside. If inflation just stays at the current levels, then they will do well.

Ritu Vohora:

Great, thank you. Well, thank you all. We’ve covered a lot of ground. Hopefully for our audience, that was insightful. But if I could summarize, I think the outlook is constructive, particularly on the macro, but cautious. Risk assets should do well, whether it’s in equity, but we should be playing the asymmetry, so really thinking about that barbell approach.

But I think, importantly, we have to be humble. We can’t forecast markets, so preparation is key and we shouldn’t be complacent. Neutral equity stance, but really thinking about those AI winners that David talked about, whether it’s the hyperscalers and those with sustainable earnings growth, in areas like utilities and health care, as we start to see that broadening. And within fixed income, short duration, and opportunities to pick up yield, particularly in areas like emerging markets.

So, thank you all. Thank you, David, for joining us remotely, and to Sébastien and Ken, we really appreciate your comments.

And thank you to everyone who joined us today. We appreciate your time. You can learn more about T. Rowe Price 2026 Global Market Outlook, our tactical views, and future events by visiting troweprice.com or by contacting your dedicated T. Rowe Price associate.

Thank you, and we look forward to seeing you again soon.

 

Investment risks

Active investing may have higher costs than passive investing and may underperform the broad market or passive peers with similar objectives. Each persons investing situation and circumstances differ. Investors should take all considerations into account before investing.

Technology companies: A fund that focuses its investments in specific industries or sectors is more susceptible to adverse developments affecting those industries and sectors than a more broadly diversified fund.

International investments can be riskier than U.S. investments due to the adverse effects of currency exchange rates, differences in market structure and liquidity, as well as specific country, regional, and economic developments. The risks of international investing are heightened for investments in emerging market and frontier market countries. Emerging and frontier market countries tend to have economic structures that are less diverse and mature, and political systems that are less stable, than those of developed market countries.

Commodities are subject to increased risks such as higher price volatility, geopolitical and other risks. Commodity prices can be subject to extreme volatility and significant price swings.

TIPS In periods of no or low inflation, other types of bonds, such as US Treasury Bonds, may perform better than Treasury Inflation Protected Securities (TIPS). Investing in technology stocks entails specific risks, including the potential for wide variations in performance and usually wide price swings, up and down. 

The value approach to investing carries the risk that the market will not recognize a security’s intrinsic value for a long time or that a stock judged to be undervalued may actually be appropriately priced.

Small-cap stocks have generally been more volatile in price than the large-cap stocks.

Because of the cyclical nature of natural resource companies, their stock prices and rates of earnings growth may follow an irregular path.

Fixed-income securities are subject to credit risk, liquidity risk, call risk, and interest-rate risk. As interest rates rise, bond prices generally fall. Short duration bonds have more risk than cash/cash equivalents such as money markets. Equities have higher risk and are subject to possible loss of principal.

Investments in high-yield bonds involve greater risk of price volatility, illiquidity, and default than higher-rated debt securities. Investments in bank loans may at times become difficult to value and highly illiquid; they are subject to credit risk such as nonpayment of principal or interest, and risks of bankruptcy and insolvency.

T. Rowe Price cautions that economic estimates and forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time. Actual outcomes could differ materially from those anticipated in estimates and forward-looking statements, and future results could differ materially from any historical performance. The information presented herein is shown for illustrative, informational purposes only. Any historical data used as a basis for this analysis are based on information gathered by T. Rowe Price and from third-party sources and have not been independently verified. Forward-looking statements speak only as of the date they are made, and T. Rowe Price assumes no duty to and does not undertake to update forward-looking statements.

Glossary

Barbell is an investment approach that seeks to allocate assets between high-risk and low-risk assets.

A basis point is equal to 0.01% or 0.0001. It is used to describe changes in percentages or interest rates.

Bearish is used when describing market sentiment; a bullish market is one where prices are generally expected to fall.

Bullish is used when describing market sentiment; a bullish market is one where prices are generally expected to rise.

Capex (capital expenditure) refers to a company’s spending in long-term assets such as property, technology, or equipment.

Central banks are financial institutions that manage the monetary system of a nation or group of nations. The Federal Reserve (Fed) is the central bank of the United States. The European Central Bank (ECB) is the central bank of the European Union countries using the euro. The Bank of England is the central bank of the United Kingdom.

Consumer price index (CPI) measures the monthly average change in prices paid by urban consumers for a market basket of consumer goods and services.

Convertible bond is a fixed income security that provides fixed income payments but can be also be converted into a set, predetermined number of shares of the issuing company’s common stock.

Diversification is the practice of investing in multiple asset classes and securities with different risk characteristics in an effort to reduce the risk of owning any single investment.

Fiscal policy refers to the use of government spending and tax policy to influence economic conditions.

Frontier markets, a subset of emerging markets, are used to describe a developing country’s market economy that does not meet the classification for an emerging market.

Gross domestic product (GDP) is a measure of total market value of goods and services produced within a country during a set time period.

The Atlanta Fed GDPNow is a model developed by the Federal Reserve Bank of Atlanta that provides estimates of real GDP growth, updated by the current quarter.

A large language model (LLM) is an AI system that processes and generates human-like text.

The “Magnificent Seven” (Mag7) refers to Alphabet (Google), Amazon, Apple, Meta, Microsoft, NVIDIA, and Tesla. The specific securities identified and described are for informational purposes only and do not represent recommendations.

Monetary policy includes the tools used by central banks to promote employment, keep prices stable, and maintain economic growth.

Purchasing Managers’ Index (PMI) is an economic indicator used to measure the direction of economic trends in manufacturing and services sectors.

Quantitative tightening (QT) refers to monetary policy that decreases the amount of money supply (or liquidity) in the economy.

Treasury inflation protected securities (TIPS) are a type of Treasury security where the principal value is indexed to inflation.

A unicorn is a privately owned startup valued at more than $1 billion.

The yield curve offers a visual way for investors to see how bonds with different maturities behave differently in response to economic trends and investor sentiment. An inverted yield curve is seen when long-term interest rates drop below short-term interest rates.

Please also refer to troweprice.com/glossary for additional terms.

Indices:

The MSCI ACWI Index is an index that covers approximately 85% of the global investable equity opportunity set across developed markets and emerging markets countries.

The Standard & Poor’s 500 Index (S&P 500) tracks the stock performance of 500 of the largest companies listed on stock exchanges in the United States.

Financial metrics and ratios:

Dividend yield divides annual dividends per share by the price per share.

Earnings per share (EPS) is a profitability measure and the difference between dividends and net income, divided by the average number of shares of common stock outstanding.

Internal rate of return (IRR) is a profitability metric that can show the expected compound annual rate of return for an investment.

Price-to-Book (P/B) ratio measures divides a company’s current share price by book value per share.

Price-to-Earnings (P/E) ratio measures a company’s current share price relative to per-share earnings.

Price-to-Sales (P/S) ratio compares a company’s stock price to revenue.

Return on Equity (ROE) is a financial measurement that divides net income by shareholder equity.

Return on Investment (ROI) is a financial measurement that measures profitability by dividing the return of an investment by the cost.

 

Important Information

Outside the United States, this is intended for investment professional use only. Not for further distribution. This material is being furnished for informational and/or marketing purposes only and does not constitute and offer, recommendation, advice, or solicitation to buy or sell any security.

Prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services.

Past performance is not a guarantee or a reliable indicator of future results. All investments involve risk, including possible loss of principal.

Information presented has been obtained from sources believed to be reliable; however, we cannot guarantee the sources’ accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are those of the author(s), are of November 17, 2025, are subject to change, and may differ from the views of other T. Rowe Price Group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.

Actual future outcomes may differ materially from any estimates or forward-looking statements provided.

This material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request.

CFA® and Chartered Financial Analyst are registered trademarks owned by CFA Institute.

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© 2025 T. Rowe Price. All Rights Reserved. T. ROWE PRICE, INVEST WITH CONFIDENCE, the Bighorn Sheep design and related indicators (www.troweprice.com/en/intellectual-property) are trademarks of T. Rowe Price Group, Inc. All other trademarks are the property of their respective owners.

 

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