Capital Market Outlook

Summary

• U.S. inbound foreign direct investment (FDI) capital expenditure totaled nearly $240 billion in the first six months of 2026, representing a 103% increase from the prior year.
• The accumulated stock of FDI in the U.S. stands at nearly $6 trillion, with manufacturing accounting for roughly 43% of the total.
• Foreign affiliates operating in the U.S. employed nearly 8.6 million workers in 2024, comprising 6.1% of total private sector employment.
• U.S. workers at foreign affiliates earned an average of $89,000 annually, which is 7% higher than the national average.
• Foreign affiliates contributed $1.5 trillion to U.S. GDP, accounted for 15.7% of total U.S. private sector investment, 12.4% of R&D expenditures, 20% of federal taxes, 22.5% of exports, 26.2% of imports, 24% of manufacturing jobs, 24% of manufacturing jobs, 24% of manufacturing jobs.
• FDI inflows from developing nations reached $63 billion in the 12 months through June 2026, more than double the $24.5 billion level from the previous year.
• South Korea alone contributed $23.4 billion in FDI flows to the U.S. during the first half of 2026.
• The U.S. accounted for nearly 16% of total global greenfield investment this decade, a share larger than the United Kingdom, India, Germany, and China combined.
• Europe's electoral cycle involves 52% of the total EU population and 46% of EU GDP across eight countries voting between November 2026 and December 2027.
• France faces significant fiscal risks with a projected 2027 deficit of 5.0% of GDP, a debt load of close to 120% of GDP, and growth forecasts halved to 0.5%.
• Interest rate spreads on French 10-year sovereign bonds have widened to exceed those of Greece and Italy in 2026.
• The European Central Bank is expected to implement additional interest rate hikes over the coming months due to inflation pressures.
• U.S. spending is projected to rise in fiscal year 2027 due to mandatory outlays, a $1.5 trillion proposed defense package, and 10-year Treasury yields above 5%.
• The U.S. accumulated a $2 trillion deficit in fiscal year 2026, with budget deficits at 6% of GDP during good times.
• The 10-year U.S. Treasury yield exceeded 5% as of October 2026, with demand for Treasurys remaining robust.
• Domestic private investors now account for the majority of U.S. Treasury holdings, while foreign official investors' share has fallen to 12%.
• The S\&P 500 posted a year-to-date return of 12.9% as of mid-October 2026.
• The 10-year U.S. Treasury yield was 5.07% as of October 16, 2026.
• WTI Crude oil prices reached $101.41 per barrel as of October 16, 2026.
• The Chief Investment Office maintains an overweight position on U.S. equities and views higher bond yields as attractive for income generation.