Five attractive investment themes for the medium and long term
20 JAN, 2026
By Jean-Louis Delhay, Chief Investment Officer at Crédit Mutuel Asset Management
The combination of accommodative Federal Reserve policies—including interest rate cuts and monthly purchases of USD 40 billion in US Treasury bonds—continues to support the US economy. The Fed’s latest economic projections also appear relatively solid, pointing to stronger growth alongside contained inflation. In addition, Jerome Powell’s term as Fed Chair ends in May, and his successor is expected to be closely aligned with President Donald Trump.
Against this backdrop, we identify five investment themes that we believe are attractive over the medium to long term.
Gold, the so-called “old barbarous relic”, has a bright future ahead. Its role as a safe-haven asset is strengthening as the influence of the US dollar declines, with central banks—particularly in emerging markets—seeking to reduce their dependence on the dollar.
A steepening yield curve is excellent news for European and US banks, whose core business involves borrowing short term and lending long term. Financial institutions therefore see their profitability mechanically improve as the spread widens between deposit rates (short-term rates) and lending rates (long-term rates). This environment is even more favourable given significantly strengthened bank balance sheets, the advance of deregulation, and a robust pipeline of M&A activity, which should benefit investment banks.
Since Russia’s invasion of Ukraine in February 2022, the defence sector has regained strong momentum and has become unavoidable. In late June, NATO members committed to a historic increase in military spending, targeting 3.5% of GDP—and up to 5% when broader security-related spending is included—compared with the current 2%. These commitments are mechanically driving a significant increase in order books across the defence industrial sector and reinforce prospects for sustained medium-term industrial growth.
Enthusiasm for AI-related equities has remained strong since the launch of ChatGPT in late 2022. The explanation is straightforward: the investment phase in AI infrastructure—to expand computing power and data storage—is lasting longer than expected, and capital expenditure is higher than initially anticipated. Companies directly involved in AI, as well as those across the value chain (power generation, electricity grids, gas turbines, cable suppliers, racks, cooling solutions, advanced semiconductors and memory), are benefiting from strong visibility. At this stage, selectivity is essential, with a focus on financially solid players.
With the implementation of Germany’s stimulus plan in 2026, local industrial companies—in Germany, Austria and Central Europe—are expected to benefit.
We maintain a positive outlook on equities, particularly in the United States, supported by the Federal Reserve’s accommodative monetary policy, a weaker dollar, and continued momentum in technology and infrastructure investment. We are also constructive on European equities, backed by the German stimulus plan and ECB rate cuts.
In fixed income, we believe the environment continues to favour a further steepening of yield curves, especially in regions with strong fiscal support. In the euro area, market expectations currently suggest the ECB will maintain the status quo throughout 2026, making long positions in European bonds asymmetrically attractive from a risk perspective. An ECB rate hike this year appears unlikely, while there remains a scenario in which inflation surprises to the downside, prompting a more accommodative stance from the central bank.
