As the end of the year approaches, the U.S. economy appears poised to enter a new phase marked by technological reinvestment, fiscal expansion, and an evolving monetary landscape.
Here are the five key trends we're watching:
- U.S. housing finance: Consolidation has strengthened lenders; mortgage activity has stabilized, with possible policy support ahead.
- AI energy demand: The data centre buildout (projects >1 GW) shifts value to power producers, grids, and storage – the enablers that keep AI running.
- Senior housing: Fundamentals are improving; occupancy is rising, backed by durable demographic demand.
- Canadian preferreds: Attractive, resilient income via rate-reset structures; steady redemptions tighten supply and support pricing.
- Office real estate: Return-to-office trends and AI-related corporate office demands are driving improvements in technology-driven markets.
Several powerful forces are converging to define this next cycle. Massive construction of AI data centres across the United States is stimulating new industrial investment and driving electricity demand. The One Big Beautiful Bill Act (OBBBA) is expected to contribute roughly 1% to GDP growth, according to Evercore ISI, reinforcing fiscal support for infrastructure, energy, and technology sectors. Meanwhile, the Federal Reserve, after its September rate cut, appears to be shifting toward a more accommodative stance, with further easing expected over the coming meetings.
At the same time, the U.S. 10-year Treasury yield sits near 4.0%, at the bottom of its recent range. That position reflects a balance between moderate economic concerns and optimism that monetary policy will support continued growth. Globally, long-term yields in Japan, Germany, the U.K., and the U.S. have moderated from recent highs, though the longer-term upward trend in sovereign rates remains intact.
Within this context, a number of enduring investment themes are emerging across credit asset classes like short-term fixed income, high-yield bonds, investment-grade corporate debt, Canadian preferred equity, and more. Each is rooted in a structural or cyclical force reshaping the economy as we approach 2026.
U.S. Housing Financing Is Starting to Normalize
The U.S. mortgage industry has quietly reshaped itself over the past five years. Consolidation has reduced competition and created a more efficient group of lenders with healthier margins and better pricing discipline. These structural improvements leave the sector better positioned to navigate today’s shifting rate environment.
After a prolonged downturn, mortgage activity appears to have stabilized. Purchase activity appears to have bottomed in the past two years, while refinancing could pick up as long-term bond yields moderate. There is also an element of positive event risk as the Trump Administration could seek to make housing more affordable, with possible solutions that could benefit mortgage providers.
Powering the AI Era
We believe the great AI data centre build is as important today as the China infrastructure boom of a decade ago. It’s impossible to pick up a Wall Street Journal or a Financial Times and not read an AI-related business news story. OpenAI’s data centre construction commitments are between $500 billion and $1 trillion, which seems like a big number for a company that is essentially a start-up and still cash flow negative. There are currently as many as eight data centres under development or construction in the U.S., with power capacity expected to exceed one gigawatt – enough electricity to power a city of one million people.
Somehow, all this construction will be financed by debt and equity, subject to the credit risk of lending against rapidly depreciating assets. The beneficiaries of AI’s expansion may not be the data centres themselves, but the enablers that keep them powered. Electricity producers, grid infrastructure operators, and energy storage providers could all play critical roles in this transformation.
Senior Housing Regaining Momentum
After the disruptions of the pandemic, senior housing has re-emerged as a sector with improving fundamentals and visible long-term support. According to data from the National Investment Center for Seniors Housing & Care (NIC), occupancy rates have increased steadily for 12 consecutive quarters, creating a favourable supply-and-demand picture.
We believe the long-term outlook remains positive. The aging U.S. population continues to create sustained demand for housing, care, and community infrastructure tailored to older adults. While the sector is not immune to broader economic fluctuations, its demographic foundation provides a measure of resilience often lacking in more cyclical areas of real estate.
Canadian Preferred Equity: Quality Income in a Reset Market
Within the fixed income landscape, Canadian preferred shares continue to stand out as a source of high-quality income with built-in protection against interest rate volatility. These instruments typically offer attractive yields relative to comparable credit risk, while their rate-reset structure allows them to adjust as interest rates change.
Over the past several years, many issuers have redeemed outstanding preferred shares at maturity or reset dates, tightening supply and supporting market pricing. This consistent redemption activity, combined with the dominance of high-quality corporate and financial issuers, has helped the market maintain depth and stability even during periods of broader rate volatility.
Office Real Estate Gradually Recovering
After several challenging years, parts of the office real estate market are beginning to stabilize. While the sector remains highly differentiated by geography and asset quality, signs of gradual improvement are emerging in certain urban and technology-driven markets.
The ongoing return-to-office trend, though uneven, has supported occupancy rates in select regions, particularly where technology and innovation clusters continue to expand. San Francisco and the broader Bay Area, for example, are seeing renewed leasing activity tied to AI-related corporate office demands.
Building for the Next Phase of Growth
As 2026 approaches, the opportunity is not simply to anticipate rate cuts or short-term market moves, but to align portfolios with the structural transformations shaping the next phase of economic expansion. The AI buildout, the demographic shift, and the reconfiguration of core sectors all point toward an investment landscape driven increasingly by fundamentals and resilience.
For advisors guiding clients through this transition, the task is to look beyond the immediate cycle and position capital where the economy itself is being rebuilt.
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Our approach to investing is disciplined and straightforward. The credit investment team applies industry-specific knowledge and experience to analyze and appreciate risk/return potential in every investment. Learn more about our investment approach here.
— Sandy Liang, CFA, is the Head of Fixed Income at Purpose Investment Partners
The information in this article is provided by Bloomberg unless otherwise stated.
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