Country-specific drivers to matter more in 2026 - VP 2026 Themes (Part 3, Dec. EM/DM Leading Indicator Watch)

This is Part 3 of our 2026 themes, digging into lesser followed country-specific themes and outliers in EM and DM. Part 1, The appropriate amount of greed + 10 surprises for 2026, was released on Dec 2nd and Part 2, A US-China world, and Europe is just living in it, was released on Dec 8th.

Cyclical macro tailwinds remain strong as the global trend towards loose monetary policy, more fiscal easing, and resilient growth leading indicators is intact. We suspect 2026 will be a year where country-specific drivers can have more impact, leading to outsized divergences in relative performances across countries.

New Ideas: Short USD vs long IDR; long Indonesian equities.

Summary by Country:

• Japan: Resolving the impossible trinity problem means JPY can finally rally in 2026
• UK: Growth LEIs yet to bottom, necessary to support domestic equity rally
• Canada: Steady growth and inflation LEIs, 10y bond short (yield up) playing out
• Australia: Accelerating nominal growth, stay long AUD vs short EUR
• Brazil: Disinflation the key macro driver, stick with risk-parity, add on election volatility
• Mexico: Growth downside risks, USMCA renegotiation looms
• Indonesia: IDR and equities have catch up potential in 2026 as headwinds fade
• South Africa: Broad tailwinds from easing cycle, low energy prices, high metals price

Link to Top Global Macro Ideas dashboard.