Economic resilience provides a constructive backdrop
In his October outlook for The Family Office’s clients, Nouriel Roubini identifies adaptable supply chains, policy responses and technology investment as important sources of economic resilience. His baseline remains constructive, with stronger growth and lower inflation next year if downside risks remain contained.
The IMF’s July 2026 World Economic Outlook Update estimates global growth at 3.5% in 2025 and projects 3.0% in 2026 and 3.4% in 2027. These forecasts provide a useful backdrop, rather than a prediction of investment returns.[1]
Technology investment is changing the demand for capital
The AI investment cycle reaches beyond software into semiconductors and the infrastructure supporting technological adoption. In his outlook, Roubini identifies this broader capital expenditure cycle as an important source of support for global demand and growth.
Building that capacity requires financing. Under Roubini’s constructive scenario, the technology investment boom becomes a more important driver of bond yields than concerns about inflation or fiscal sustainability.
This helps explain why central bank policy rates and longer-term borrowing costs may move differently. Policy rates influence short-term financing, while longer-term yields also reflect expectations for growth and inflation, alongside the demand for capital.
For private-market investors, the relevant question is where this investment cycle creates commercially viable opportunities. A compelling theme still needs to translate into sustainable revenues, sensible valuations and a realistic plan for generating cash flow.
Government borrowing also influences financing conditions
Roubini’s outlook highlights large fiscal deficits and rising public debt as another influence on sovereign bond yields. As governments seek financing alongside businesses, the balance between capital supply and demand can affect borrowing costs across the economy.
These conditions reinforce the importance of assessing how an investment is financed. Debt levels, interest costs and refinancing schedules can influence a company’s ability to invest and the returns available to its owners. In private markets, these considerations belong in the investment analysis from the outset.
Energy remains an important variable
Energy prices can affect both operating costs and inflation. Persistent increases may slow the pace of monetary easing, particularly if they begin to influence broader prices and inflation expectations.
Roubini treats further energy disruption as a downside scenario, rather than his central expectation. For investors, the practical response is to examine how businesses manage input costs, maintain pricing power and protect cash flow as conditions change.
What could shape interest rates in the months ahead?
Looking toward 2027, Roubini’s baseline envisages stronger growth and lower inflation, supported by technological innovation and the containment of geopolitical risks. This provides a constructive foundation for considering long-term investment opportunities.
The path for financing costs may nevertheless vary. Strong investment demand can influence longer-term yields even as inflation moderates, while government borrowing and energy prices remain relevant variables.
For private-market investors, this means evaluating opportunities across a range of financing conditions. An investment case is more robust when its cash flows and value-creation plan can support returns without depending on a rapid fall in interest rates.
What does this mean for private-market investors?
Private markets offer opportunities to invest in businesses and assets where managers can work directly on growth, operational improvement and financing decisions. Private equity, private credit and real estate each respond differently to changes in the cost of capital.
In private equity, managers may build value through stronger operations, revenue growth and improved cash generation. In private credit, floating-rate structures may support income when rates remain elevated, provided borrowers can service their debt. In real estate, asset quality, occupancy and rental income need to be considered alongside financing costs.
These opportunities make investment selection central to the private-market proposition. Entry valuations, capital structures and the quality of underlying assets influence whether a strategy can translate an economic opportunity into attractive long-term results.
Private investments also typically involve longer holding periods and limited liquidity. Allocations should therefore reflect investors’ time horizons, cash requirements and risk tolerance. The benefit of a long-term approach depends on selecting suitable investments and managing them well.
Manager selection helps turn opportunity into value
In private markets, selecting the manager is an integral part of selecting the investment. Managers influence which assets are acquired, how they are financed, how value is created and when investments are realized.
BCG’s January 2026 analysis reports historical annual internal rates of return of 20.7% for top-quartile private equity funds, compared with 13.7% for the median and 7.5% for bottom-quartile funds in its analysis covering 2003–2022.[2]
Due diligence should examine how a manager generated past results, including the contribution of operating improvements, borrowing and valuation changes. Sector expertise, team continuity, underwriting discipline and experience managing through different financing conditions also matter. A strong track record requires assessment in the context of the strategy being offered today.
For investors, working with an experienced private-market investment partner brings this assessment into a broader wealth strategy. At The Family Office, our investment approach emphasizes long-term investing, international diversification and manager selection. Through rigorous selection and relationships with global sponsors, we help clients access private market opportunities aligned with their objectives.
As the interest-rate environment evolves, the focus remains on the quality of the investment and the expertise behind it. Carefully selected private-market strategies, supported by experienced managers and disciplined evaluation, can play an important role in pursuing long-term financial objectives.
