Growth Holds, Valuations Stretch: A Cycle Supported by Policy

DWS’s quarterly Traffic Lights outlines a market still carried by resilient growth, easing policy and selective exuberance, even as volatility surfaces beneath the index calm. 

• Sector rotations and shifting Fed expectations drove the sharpest S&P 500 drawdown since spring, while Japan’s rising yields hinted at deeper global spillovers.

• The 2026 outlook leans on broadening growth, accommodative central banks and fiscal support, with equities still led by AI capex but requiring disciplined selection.

• Fixed income benefits from high carry and stable curves; alternatives gain from policy easing, structural spending and a persistent bid for real assets.

For a more granular view of how these signals translate into tactical and strategic positioning, the full dashboard lays out the map.