Former hedge fund manager. 30+ years in institutional finance. I invest and advise through a macro-thematic framework — identifying the structural forces reshaping global monetary policy and capital markets before consensus catches up. As Co-founder of GMG and America Mortgages, I live at the intersection of macro and property markets every day.
Introduction
These are my personal investment convictions for 2026 — which also drives our house view. My approach is top-down: identify the macro regime, then find the assets that benefit before consensus catches up. Right now the regime is pointing toward US Treasury market stress, an inevitable Fed pivot, and a 2H 2026 that looks nothing like today. For high net worth investors, family offices, and international buyers of US real estate, the implications are direct and actionable.
1. The 10-year Treasury Will Break 4.50% — And Washington Cannot Afford It
My thesis starts in the repo market, not in equities or the Fed's dot plot. US repo markets are showing persistent funding stress that mainstream commentary ignores. Japanese institutions — historically the world's most reliable buyers of US Treasuries — are reassessing their appetite as the Bank of Japan normalises. When the most reliable buyer becomes reluctant, the long end of the curve has only one direction.
My call: the 10-year breaks 4.50% before mid-2026. But 4.50% is not just a technical level. It is a fiscal pain threshold — because the stock market is now a primary revenue source for the US government.
The Numbers That Matter:
Individual income taxes = ~50% of $4.9T in FY2024 federal receipts. Capital gains = ~11% of that. Capital gains revenue collapsed 41% during the dot-com bust and 49% in 2008-09. Washington is running a $1.8T annual deficit. It cannot stomach a sustained equity and bond selloff simultaneously. The 10-year yield and the S&P 500 are fiscally joined at the hip.
Watch for any aggressive policy announcement — particularly on trade — that triggers simultaneous equity selling and bond selling. That combination is the tripwire that forces a pivot. The bond market is the world's most powerful negotiating counterparty.
2. Tariffs Are An Inflation Impulse. AI Productivity Is Not Coming In 2026.
Two narratives are competing for the inflation outlook and both are being misread.
Tariffs are a one-time price level step-up, not a structural inflation driver. But 'just an impulse' at exactly the wrong moment in the rates cycle is enough to extend market discomfort through H1. The Fed will respond to the optics as much as the reality.
The AI productivity bull case is real — but not in 2026. Transformative technology delivers its productivity dividend a decade after the investment wave, not the same quarter. The electrification of manufacturing, the internet build-out — both showed up in the data long after the hype. Anyone building a 2026 macro thesis around AI-driven disinflation is getting the timing badly wrong.
3. The FED Will Blink: 2020-style QE, Then Yield Curve Control
Once the 10-year breaks 4.50% with force, the Fed moves. The programme will have a new name — 'market functioning' — but it will be functionally identical to 2020-era QE. The actual objective: keep US sovereign borrowing costs manageable.
The longer-term destination is Yield Curve Control. Japan got there first. The US will resist the label but follow the logic: cap a point on the curve to prevent a sovereign funding crisis. We take the first steps in 2026.
For mortgage rates: 6–7% in 2026. The Fed's long-end suppression provides a ceiling. A return to 3% is not coming — that was a historical anomaly, not a baseline.
4. US Real Estate Prices Will Surge In 2h 2026: The YCC And Cap Rate Thesis
The conventional wisdom: higher rates equal lower property prices. My thesis inverts it — specifically for 2H 2026.
When YCC suppresses the long end, three forces converge simultaneously: mortgage rates ease toward the lower end of the 6–7% band, unlocking sidelined buyer demand; a weakening dollar makes USD-denominated assets significantly cheaper for Asian, European, and Middle Eastern buyers on a currency-adjusted basis; and in a QE environment with residual inflation, real assets become the obvious store of value.
Cap rates in US real estate have been pushed wide by three years of rate pressure. When liquidity improves and the long end is capped, cap rate compression happens fast. Investors in the market before that compression capture the full move. This is the window I am positioning around for 2H 2026.
"My on-the-record call for December 2025: US real estate will have one of its best six-month periods in recent memory in 2H 2026."
For International And Expat Buyers:
Dollar weakness provides an effective price discount for Singapore, Hong Kong, Asian, and European buyers. QE improves financing terms. The structural supply deficit supports long-term values. America Mortgages specialises exclusively in US mortgage financing for this buyer profile.
5. The Dollar Is The Only Release Valve — DXY Breaks 80, Tests 75
My bearish DXY view is a policy logic call, not just a monetary mechanics one.
The US is simultaneously pursuing low interest rates, sustained growth, manufacturing reshoring, and fiscal stability. You cannot have all four with a strong dollar. Reshoring requires price-competitive exports — impossible with a strong USD. QE is dollar-negative. Inflating away $35 trillion of debt requires currency erosion over time. The dollar is the only variable that can absorb all the contradictions at once.
Low Rates + Growth + Manufacturing Reshoring + Strong Dollar = Impossible.
The USD has to be the release valve. That is not a forecast — it is arithmetic. DXY breaks 80, tests 75 in 2H 2026.
For global investors: a DXY move of this scale reprices every USD-denominated asset class. It is rocket fuel for gold, silver, aluminium, and US real estate valued in foreign currencies. Position accordingly.
6. Bearish Legacy Software: AI Platforms Will Displace The Interface Layer
I am structurally bearish on legacy software businesses. When an AI agent can perform the task that required a dedicated application, the application becomes redundant. Value migrates to whoever owns the data, the infrastructure, or the content relationships — not the software layer in between.
I cannot see Spotify in its current form in five years. Not because music streaming disappears — but because discovery, curation, and consumption will be AI-native, accessed through conversational platforms rather than dedicated subscription apps. The same logic applies across productivity software, enterprise tools, and consumer platforms. The businesses worth owning are those with irreplaceable data assets or AI infrastructure. Everything else is at risk.
"The interface layer is being replaced. The question is who owns what sits above and below it."
7. Data Centre Capital Requirements: Staggering In Scale, A Hidden Macro Headwind
The AI infrastructure build-out is one of the most significant capital deployment stories in a generation — and at GMG, we are seeing it first-hand. We are actively financing data centre transactions across Asia-Pacific, and the deal sizes, velocity, and appetite for capital are unlike anything I have seen in thirty years.
The macro implication that fewer people are discussing: the volume of capital required to build AI infrastructure — from equity markets, debt capital, infrastructure funds, and private credit — is a meaningful headwind for every other asset class competing for institutional allocation. Every dollar committed to a hyperscaler data centre in Southeast Asia is a dollar not going into residential real estate, commercial property, or traditional fixed income.
For private credit providers with regional expertise, the financing gap is significant. The structures required — construction bridges, complex ownership arrangements, power infrastructure dependencies across multiple Asian jurisdictions — are not served well by traditional bank lending. This is where GMG Capital & Advisory is actively deploying. The opportunity is real; so is the macro drag on everything competing with it for capital.
8. Geopolitics: Sphere-of-influence Crystallisation And Rising Risk Premiums
2026 accelerates sphere-of-influence crystallisation rather than direct confrontation. The US consolidates in Latin America — Venezuela, given its energy significance and geographic proximity, will generate sustained noise as Washington reasserts Monroe Doctrine-style influence. This is a 10–20 year dynamic, not a news cycle.
China consolidates Asia and deepens into MENA via BRI dependencies. Europe is caught in the middle — a contested hybrid between US security dependence and Chinese economic entanglement. The map: USA => Latam; China => Asia/MENA; Europe => hybrid outcome.
For investors operating across Asia-Pacific — as we do at GMG — this is not background noise. It shapes capital flows, currency dynamics, and which markets remain attractive for the next generation of investment. The map being drawn now defines returns for decades.
On The Record: My 13 Calls For 2026 — December 2025
- Asset markets weak in Q1 — rate stress and inflation anxiety dominate
- Tariff policy delivers an inflation impulse that markets overprice through H1
- AI productivity dividend is years away — not a 2026 disinflation story
- 10-year Treasury breaks 4.50% before mid-year, triggering a policy response
- Fed deploys 2020-style QE to suppress the long end — first step toward YCC
- 30-year mortgage rates stabilise 6–7% as YCC caps the long end
- US real estate experiences one of its best six-month periods in 2H 2026 — YCC + dollar weakness + cap rate compression + international capital inflows
- DXY breaks below 80, tests 75 in 2H 2026 — the dollar is the arithmetic release valve for contradictory US policy objectives
- Precious metals continue bull run; aluminium breaks out
- Legacy software platforms face structural disruption — many will not exist in current form within five years
- AI data centre capital requirements are a major, underpriced macro headwind — and a significant private credit opportunity in Asia
- Geopolitical risk premiums rise throughout the year
- Sphere-of-influence crystallisation: USA => Latam; China => Asia/MENA; Europe navigates a hybrid outcome
"The second half of 2026 rewards those who held their nerve and understood that the pivot — not the panic — is the signal."
FAQ: 2026 Rates, Real Estate And Global Investment Strategy
Q1: Will US home prices rise or fall in 2026?
A: Rise — particularly in 2H. When the Fed implements QE and caps the long end, mortgage rates ease, dollar weakness attracts international capital, and cap rates compress. The structural supply deficit underpins values. For international buyers, 2H 2026 is one of the best risk-adjusted entry points in years.
Q2: What will happen to US mortgage rates in 2026?
A: The 10-year breaks 4.50% in H1, triggering a QE response that brings 30-year mortgages into a 6–7% stabilisation band. No return to 3% — that era was a historical anomaly. But QE-driven suppression unlocks meaningful buyer demand that has been sidelined.
Q3: What is Yield Curve Control and how does it affect real estate?
A: YCC is when a central bank explicitly caps yields at a specific maturity through unlimited asset purchases. When the US moves toward YCC — the logical endpoint of the path I'm mapping — mortgage rates are suppressed, the dollar weakens, and capital rotates into hard assets. For high net worth investors, YCC is the monetary regime that historically produces the strongest real asset returns.
Q4: Is now a good time for foreign nationals to invest in US real estate?
A: The 2H 2026 window will be one of the most compelling entry points for international buyers in years. Dollar weakness provides an effective price discount. QE improves financing terms. The supply deficit supports long-term values. The key is positioning ahead of cap rate compression — waiting until the pivot is fully visible means missing the early move. America Mortgages handles US mortgage financing exclusively for this buyer profile.
Q5: Why will the US dollar fall in 2026?
A: Because it is the only release valve for contradictory US policy objectives. You cannot simultaneously have low rates, GDP growth, manufacturing reshoring, and a strong dollar. Each objective individually requires dollar weakness. The currency absorbs the contradiction so the rest of the system doesn't have to. DXY breaking 80 and testing 75 is not a forecast — it's arithmetic.
Q6: Which software companies are most at risk from AI?
A: Any business whose primary value is the interface layer — the application itself, rather than underlying data, content relationships, or infrastructure. Subscription platforms that aggregate and deliver functionality face structural pressure as AI agents replace the need for dedicated applications. Businesses worth owning are those with irreplaceable data assets or AI infrastructure sitting above and below the disrupted layer.
Q7: What is the data centre investment opportunity in Asia?
A: One of the most significant private credit opportunities we've seen at GMG in a decade. AI compute demand is driving a data centre supercycle across Asia-Pacific. Traditional bank lending is poorly positioned for the structures required. GMG Capital & Advisory is actively participating. The opportunity is real; so is the macro drag on other asset classes as this sector absorbs institutional capital at scale.
CLOSING
These are my December 2025 convictions — on the record, for accountability. I will revisit them in my Q1 2026 update. Until then: watch the 10-year. Stay in hard assets. Don't mistake the panic for the signal.
For high net worth investors and international buyers looking to act on this outlook — through US mortgage financing via America Mortgages or cross-border real estate finance via Global Mortgage Group — I am available to discuss.
Happy Hunting
Donald Klip
Co-founder, Global Mortgage Group, Head GMG Capital Advisory
www.gmg.asia | americamortgages.com
DISCLAIMER: The views expressed represent the personal macro investment views of Donald Klip as of December 2025, for informational and entertainment purposes only. Not investment advice. All investments involve risk. Seek independent professional advice before making any investment decision.
