We’ve published our February 2026 Monthly Investment Outlook by Economic Regime, a data-driven framework designed to evaluate relative asset class performance based on current economic conditions.
A Rules-Based Economic Regime Model
Our approach incorporates 11 monthly economic indicators spanning:
- Economic growth
- Inflation
- Employment trends
- Consumer and business activity
- Monetary policy conditions
Each indicator is evaluated using both trend (longer-term direction) and momentum (rate of change). By combining these signals, we assess how similar economic regimes have historically influenced 12-month forward performance across:
- Asset classes (equities, fixed income, commodities, real estate)
- Equity sectors
- Fixed income segments
- Equity factors (value, growth, size, volatility, momentum)
This framework is not designed to forecast short-term market movements or serve as a standalone timing tool. Instead, it provides structured context for portfolio construction and risk management decisions.
February 2026 Highlights
Based on current composite signals, areas screening as relatively more attractive include:
- Commodities
- Real Estate
- Small Cap equities
- Select defensive sectors
- Equal-weight and value-oriented factor exposures
Areas screening as relatively less attractive include:
- Large Cap equities
- Developed International markets
- Certain rate-sensitive fixed income segments
- Momentum and minimum volatility factors
These signals reflect historical tendencies observed under comparable economic environments.
Why Economic Regime Investing Matters
Market leadership often shifts as economic conditions evolve. By monitoring changes in growth, inflation, labor markets, and monetary policy, investors can better understand where relative opportunities and risks may be emerging.
Our economic regime framework is one of several inputs used in portfolio decision-making and is updated monthly as new data is released.
Download the full February 2026 Investment Outlook (PDF) below to view detailed tables, sector breakdowns, fixed income analysis, factor insights, and full methodology
Monthly Investment Outlook by Economic Regime Feb 2026
Steve Bruce, CMT is the Co-Founder and Chief Investment Officer of Bruce Wood Capital, where he focuses on systematic global macro strategies and long-horizon, data-driven research