Mackenzie's 2026 Outlook: Navigating a Year of Fewer Rate Cuts and New Growth Drivers

TORONTO, ON – January 06, 2026 – As investors look ahead, Mackenzie Investments has released its 2026 Market Outlook, painting a picture of a global economy shaped by resilient fundamentals, divergent central bank policies, and powerful technological shifts. Following a tumultuous 2025, the asset management firm advises that discipline, diversification, and a focus on quality will be paramount for navigating a landscape marked by persistent inflation and stretched valuations.

The annual report suggests that the forces of fiscal stimulus, particularly in the United States, and the widespread adoption of artificial intelligence will provide significant tailwinds for growth. However, it also cautions that markets may be too optimistic about the pace of interest rate cuts from the U.S. Federal Reserve, a reality that could introduce fresh volatility.

"Investors demonstrated resilience during a year dominated by relentless headlines about tariffs, central bank policy, immigration and geopolitics," said Steve Locke, Chief Investment Officer, Fixed Income and Multi-Asset Strategies, at Mackenzie Investments. "As we look to 2026, we believe there will continue to be challenges – but also opportunities for investors who stay disciplined, prioritize quality and take a strategic approach to portfolio construction."

A Tale of Two Central Banks

A central theme of Mackenzie's outlook is the diverging paths of North American monetary policy. The firm projects that the U.S. Federal Reserve may not deliver as many rate cuts as markets currently anticipate. This cautious stance is rooted in core inflation that remains stubbornly near 3 percent and, critically, the significant fiscal stimulus stemming from the 'One Big Beautiful Bill Act' (Public Law 119-21), which was signed into law in mid-2025.

This major piece of U.S. legislation, a cornerstone of President Trump's second-term agenda, makes permanent many of the 2017 individual tax cuts, raises the cap on the state and local tax (SALT) deduction, and introduces new deductions for tips and car loans. Other major financial institutions, including Goldman Sachs and J.P. Morgan, have also identified this act as a key driver of U.S. economic outperformance in 2026, with Mackenzie estimating it could add approximately 0.5 percent to U.S. GDP, bolstering both consumer spending and business investment.

In contrast, Mackenzie anticipates "modest easing" from the Bank of Canada as households contend with the financial strain of mortgage refinancing. This view aligns with broader analysis, as research from several major Canadian banks, including RBC and BMO Capital Markets, forecasts the Bank of Canada will likely hold its policy rate steady at 2.25% through 2026 after a series of cuts in the prior period. This suggests a period of stability rather than aggressive easing, reinforcing Mackenzie's call for investors to remain nimble and avoid over-reliance on specific rate-cut scenarios.

Equity Resilience Meets Valuation Reality

Despite high valuations in certain market segments, Mackenzie maintains a constructive view on equities for the year ahead. The firm's optimism is built on a foundation of strong fundamental drivers, including the aforementioned fiscal stimulus, a global capital spending cycle, and profound productivity gains expected from the widespread adoption of artificial intelligence.

This sentiment is widely shared across the financial industry. Analysts at J.P. Morgan have highlighted an "AI-driven supercycle" that is fueling record capital expenditures and expanding corporate earnings across multiple sectors. Similarly, Goldman Sachs points to AI-driven productivity as a key factor supporting above-trend earnings growth. Mackenzie's outlook suggests that while some thematic areas may appear frothy, most equities will be well-supported by improving margins and reasonable valuations relative to their growth prospects.

However, the report does not ignore the risks. The S&P 500 currently trades at a forward earnings multiple of over 22, a level historically seen only during the dot-com bubble and the post-pandemic recovery, both of which preceded sharp market declines. This elevated valuation leaves little room for error, making stock selection and fundamental analysis more critical than ever.

"Equities remain a compelling asset class for long-term investors," noted Lesley Marks, Chief Investment Officer, Equities, at Mackenzie Investments. "While we expect some volatility, the underlying drivers of earnings growth, from fiscal stimulus to technological innovation, provide a strong foundation for equity markets. The key is to stay disciplined and diversify beyond the familiar names."

The Strategic Role of Hard Assets in a Digital Age

In an environment of persistent inflation and geopolitical uncertainty, Mackenzie emphasizes that commodities will continue to play a vital role in portfolio diversification. While gold remains an attractive hedge, the report highlights a burgeoning demand for industrial and technology-related commodities.

Demand for metals like steel, copper, uranium, and rare earth elements is being propelled by massive investments in infrastructure and technology. This includes the global energy transition and, increasingly, the build-out of data centers required to power the artificial intelligence revolution. The electrification of everything from transport to computing is creating a structural demand for copper, which many analysts now view as a critical transition metal.

This view is supported by aggressive market forecasts. J.P. Morgan Global Research, for example, projects copper prices could average over $12,000 per metric ton in 2026 due to a significant market deficit. Meanwhile, the outlook for gold is also exceptionally strong, with some analysts at major banks forecasting prices to surpass $5,000 per ounce by late 2026, driven by continued robust purchasing from central banks and its enduring appeal as a safe-haven asset.

Even steel is poised for a moderate recovery, according to the World Steel Association, supported by infrastructure projects in the U.S. funded by legislation like the CHIPS Act and growth in developing nations. Mackenzie's analysis suggests that this broad-based commodity strength offers investors a tangible way to diversify away from purely financial assets and gain exposure to the powerful physical trends reshaping the global economy.