U.S. Dollar: We believe the dollar has peaked for the cycle, but near term it is likely to trade flat to slightly higher, supported by strong portfolio and FDI inflows and narrowing rate differentials. Longer-term structural headwinds remain, but history suggests any sustained downtrend will unfold gradually.
Oil: We expect WTI to hover near $60 in 2026, rising to $65–70 in 2027–28 as the market tightens. Slowing demand, strong non-OPEC supply, and the unwind of OPEC+ cuts justify a cautious near-term view, with a more balanced market emerging after 2026.
Expected Returns
Our five-year return outlook points to a tougher portfolio-construction environment, with elevated valuations, tight credit spreads, and structurally higher inflation, dampening returns. To meet performance targets, we favor moving from the traditional 60/40 model to a more diversified 40/30/30 mix anchored by Private Equity, Real Assets, and Private Credit, which we believe offer the most compelling medium-term return potential.
EXHIBIT 3: In Our View, Private Equity, Real Assets, and Private Credit Stand Out as Some of The Most Attractive Sources Of Return Over The Next Five Years
