Where the Money Goes: Short Bonds, Selective Tech and Emerging Markets in the New Era of Global Allocation

There is something profoundly different in the air of financial markets in 2026. Not the background noise of stock exchanges, nor the echo of central bank statements. It is something subtler: a widespread feeling among portfolio managers that the old maps no longer work, that the terrain has shifted while everyone was looking elsewhere. So you sit down, observe the macro landscape with fresh eyes, and redraw the routes.

On the fixed income front, the direction seems clear: yes to corporate bonds, no to government bonds, or at least not in any meaningful weight. Spreads on corporate securities remain interesting — not at the historically elevated levels that signal panic, but attractive enough to justify an overweight relative to sovereign debt. The real strategic bet, however, concerns duration. The most seasoned managers are keeping it short, well below the reference benchmarks that sit around five years: better to position between two and a half and three and a half years, because inflation risk has not disappeared by any means.

And here opens the most compelling chapter of the analysis. The United States, in full expansion mode, is running a public deficit to GDP ratio approaching 7% — a figure historically associated with recessions, not growth periods. The labor market is solid, unemployment at lows, wage growth moving between 3.5% and 4.5%, comfortably above the 3.9% inflation reading. Consumer spending is holding up, in fact accelerating. In this context, fiscal policy acts as an inflationary multiplier, while monetary policy remains in expansionary territory: Fed Funds at 3.75% and inflation expectations at 2.40-2.50% produce barely positive real rates on a forward basis, still negative on the current data. Historically, real rates have moved between 1% and 2%: there is still a long road ahead, and yield curves could steepen further. The thirty-year American bond above 5.5% is no longer science fiction.

On the equity front, the bias remains pro-risk as long as the macro backdrop holds. But within equities, selection makes all the difference. Technology continues to be an area worth holding, but with surgical selectivity. During the week of June 16, 2026, many managers are trimming positions in semicap equipment — names like Applied Materials, Lam Research and their peers — which have run far and which, over the next three or four quarters, may see capex spending slow. Better to move upstream: toward semiconductor producers and infrastructure installers, where structural demand remains robust.

Alongside technology, two anti-correlated sectors deserve strategic attention. The first is healthcare, particularly medtech and biotech, segments that have underperformed recently and show negative correlation with tech: in the event of volatility or a tech correction, they could act as a buffer for portfolios. The second is financials: in a context of steepening curves and solid economies, banks benefit from rate carry and credit expansion, with credit loss figures remaining contained. Despite recent underperformance, the banking sector still deserves a privileged seat in the portfolio.

There is also a theme that increasingly fascinates the most attentive investors: emerging markets. Relatively cheap against historical valuations, boosted by a weak dollar and indirectly supported by the American economy, emerging markets are reaping the fruits of a quiet redistribution of global supply chains. China, once the top supplier to the United States with around 15% of its exports heading across the Pacific, has dropped to around 5%. But production has not come back to America: it has moved to Vietnam, to other Asian countries, to markets that now export to the United States what Beijing used to manufacture. Emerging markets, in short, are not victims of reshoring. They are its true beneficiaries.

Alberto Conca - Partner of LFG Holding and Chief Investment Officer of LFG+ZEST.