CITIC Securities (600030) has released a research report stating that the global economy maintained resilience this year, the Middle East situation has shown a glimmer of peace, and the blue wave in the midterm elections is expected to influence the market narrative direction next year. It is anticipated that the U.S. economy will grow more balanced and moderately next year, the EU's domestic demand should continue to expand, and Japan's economy is expected to recover. The impact of oil price shocks will weaken next year, overall inflation in Europe and the U.S. may decline after experiencing a blunt peak, and Japan's headline inflation rate will be significantly suppressed by policy. European and American central banks are approaching the end of this rate hike cycle, while the Bank of Japan may raise rates quarterly until the first half of next year. The U.S. federal government deficit ratio is expected to remain roughly stable, data center construction will face stronger constraints at the state level, and France's fiscal consolidation efforts risk falling short of expectations. U.S. equities may be more suitable for a buy-on-dips strategy next year, with a preference for balanced style allocation. Both U.S. Treasury yields and the dollar index have limited downside room, and gold prices are expected to recover as expectations of liquidity tightening ease.

Economic Growth: More Moderate Momentum. CITIC Securities expects the U.S. economy's growth momentum to be more moderate next year with a more balanced demand structure. The technology investment boom should cool under stricter financing and regulatory conditions, traditional business investment is expected to recover, residential investment is likely to remain weak, consumption momentum may slow slightly, and labor market vitality may decline somewhat. The EU's domestic demand should continue its steady expansion trend, and its trade deficit with China may narrow as trade barriers take effect. Japan's economy may recover as energy shocks fade, and a persistently tight job market will support wage growth momentum and corporate automation investment demand.

Inflation: Concerns Will Ease. Oil prices are more likely to decline than surge, and the risk of core inflation reaccelerating is small. We expect U.S. headline CPI year-over-year to hit a blunt peak in Q4 2026, then decline rapidly from March next year due to base effects, before entering a period of mild fluctuation. Eurozone wage growth is expected to remain stable, and a decline in overall inflation should only be a matter of time. Japan's virtuous cycle of rising prices and wages is expected to continue long-term, and headline inflation is projected to be significantly suppressed by food tax cuts starting from Q2 2027, remaining at low levels, with a clear front-high, back-low trajectory throughout the year.

Economic Policy: Clearer Boundaries. European and American central banks are nearing the end of this rate hike cycle. We expect the Federal Reserve to raise rates by 25bps this December and at most once more next year, the European Central Bank to end its hiking cycle after a 25bps increase this December, and the Bank of Japan to maintain a quarterly 25bps pace until the first half of next year. U.S. politics will enter a phase of greater internal friction after the Democratic sweep of both chambers. Data center construction will face stronger constraints at the state level, and we believe states are more likely to resolve negative externalities of related projects through appropriate regulations rather than long-term suspension of approval processes. The U.S. will have insufficient capacity for fiscal expansion and weak willingness for fiscal consolidation next year. The federal government deficit ratio is expected to stabilize around 6%, and the debt ceiling issue does not pose a major risk. The Eurozone's overall fiscal stance may tighten next year, with France expected to consolidate finances but risking less intensity than anticipated, while Germany's fiscal expansion is likely to continue. Japan's Takaichi cabinet's tax cut plan faces pressure to secure funding, and uncertainty in fiscal financing may continue to support Japanese government bond yields.

Asset Allocation: More Balanced Opportunities. The market is increasingly scrutinizing technology companies, and U.S. equities may face more frequent or severe volatility next year. We are cautious about the financial risks of new cloud providers and the pricing upside for computing hardware, but the growth narrative for the mid-to-downstream computing chain should still hold. Traditional sectors offer valuation appeal and are expected to benefit next year from easing liquidity tightening expectations and support from economic momentum. U.S. equities suit a buy-on-dips strategy, and we prefer a balanced style allocation approach. The 10-year U.S. Treasury yield should have confirmed its peak, and after the midterm elections, improved market confidence in U.S. fiscal discipline and better dollar liquidity expectations may push it down to around 4.5%. The dollar index may decline slightly next year, fluctuating weakly below the 100 mark. Gold may regain the necessary conditions for capital inflows by the end of this year, and prices are poised for recovery, with the timing of a sentiment turning point worth seizing.