What will 2026 hold for US financial markets?

The outlook for US financial markets is stable this year, and opportunities abound, but there are some potential risks on the horizon. Our Head of Financial Markets, Katharyn Meyer, shares:

The U.S. economy ended 2025 on a strong note. Markets were thriving, AI-driven investment was fueling growth, and ING’s clients were benefiting from the momentum. It felt like a stable foundation for the year ahead, and I began mapping out the key themes I expected to shape the landscape. Then January arrived — and the sense of stability shifted quickly.

Venezuela reminded us how quickly stability can be shaken. For what it’s worth, I agree with our economist Opens in a new tabJames Knightley that this is primarily a medium- to long-term story. In short: Venezuela’s leadership change may slightly increase oil supply and ease prices, but any real investment opportunities are long-term and come with major risks.

For more on James’s perspective, you check out his recent podcast with Barrons Opens in a new tabhere.

With that context, here are six themes I’ll be watching closely in 2026:

The regulatory landscape in the US looks very different to the one in Europe and is likely to change further. The SEC chairman, Paul S. Atkins, wants to modernise and open up the securities market. The new CFTC chairman, Michael Selig, could also support this cause. If the US deregulates, modernises, and opens the capital markets further, it will create the necessary velocity of capital within the system, to enable, for example, more private companies to become public companies, and encourage more foreign companies to list in the US. Opportunities abound in Europe if companies can seize them, but not from a regulatory perspective. It’s the US that presents the regulatory opportunity for more open capital markets, and key opportunity for companies and investors.

There's more confidence in the marketplace now than there was six months ago, driven by continued AI investment and relatively robust consumer spending. But one of the big, looming questions is what will happen with the Trump administration’s tariffs. Since the Big Beautiful Bill was passed, tariffs have become a central component of the US economy’s budget. If the Supreme Court determines that the tariffs are null and void, that could worsen the fiscal trajectory of the US, causing uncertainty that leads to a steepening in the US Treasury curve.

An open question is how long the AI boom will continue in its current form. In the absence of terrific economic growth, I think concerns about US debt sustainability could come to the forefront again this year and will continue to put pressure on longer term yields.

There’s another open risk this year – if the US Treasury yield curve steepens to an uncomfortable level because of the US fiscal situation, the US government could start buying back longer-dated Treasuries. Bringing yields down at the longer end of the curve likely stokes asset prices higher, which could result in an inflation re-acceleration. Then we get into a very vicious cycle.

Private credit is something to watch. I’m not as negative as those who worry that the private credit market is creating a bubble, but you do need to ensure efficient  velocity of capital within the system, and for that, you need open capital markets. There’s a lot of money currently invested in private credit, both by retail and institutional investors, which is locked. Credit spreads should remain tight this year, because there is no shortage of available funds for investment at the moment, but you need to have open capital markets to ensure that remains the case. You also need robust capital markets so that private credit issuers can issue in the public market in the future. If there’s a hiccup, the amount of money currently tied up in the private credit market could put the overall market at risk.

The weaker dollar is here to stay. ING’s call for EUR/USD to reach 1.20 by late 2026 remains entirely plausible given the evolving policy landscape. The most obvious driver, beyond the fiscal situation, is the divergence in central bank policies around the world.

The recent announcement that President Trump intends to nominate Kevin Warsh to succeed Jerome Powell adds a new dimension to that divergence. Warsh has historically been seen as hawkish, with a record of being vigilant on inflation and supporting higher rates during his previous tenure at the Federal Reserve. He has also been regarded as a comparatively moderate figure who is cautious about using heavy monetary stimulus even though he has expressed a preference for lower rates. This combination positions him as a moderate hawk entering a role where strong dovish pressure from the White House will continue. President Trump has repeatedly pushed the Federal Reserve to lower interest rates significantly and has been publicly critical of Chair Powell for not easing more aggressively.

If the Eurozone maintains its current interest rate stance while the United States continues on a cutting trajectory, even at a slower pace, rate differentials will continue to point toward a weaker dollar over time. Even if Warsh reduces the speed of anticipated cuts, the underlying divergence between a still accommodative United States and a comparatively firmer Eurozone outlook continues to suggest a softer dollar.

We have also seen an adjustment as investment moved away from the dollar and dollar denominated assets over the past year, particularly during the period around Liberation Day. In the absence of a solid alternative right now, the dollar is unlikely to lose its global dominance in the near term. However, the United States still needs to remain vigilant. Without getting its fiscal situation under control, a more attractive long term alternative could eventually emerge.

With more 24/7 marketplaces and more tokenised collateral coming to the forefront, digital channels are increasingly beginning to disrupt the banking industry. The implications need to be discussed and the risks thought through this year, because this could lead to a structural shift that upends the existing market structure.

In the US, we have a tale of two economies. Costs are elevated for regular consumers, but that hasn’t had a material impact on how the marketplace functions, or its ability to go higher. If there are more roadblocks to Trump administration policies, such as the rollback of the current tariff policy by the Supreme Court, that could be disruptive to the marketplace and have a material impact this year.

If there is a change in Congressional control after the midterm elections in November, that could also reduce the Trump administration’s ability to act. That also applies to the crucial area of financial deregulation, because regulatory agencies are governed by Congress. There may be a rush to get a lot of legislation passed sooner rather than later in 2026. It’s going to be another busy year!