For the US, Economic Opportunity is Narrow and Increasingly Brittle

Westpac’s outlook highlights a polarized US market: tech investment and AI-related spending are driving equity gains—pushing benchmarks like the US SP 500 to record levels—while broad consumption, housing investment and non-tech business investment are weakening. Brent oil has hit a new cycle high, and elevated term yields alongside sticky inflation risk are likely to keep a hawkish tilt in rates, with markets pricing at least some chance of further hikes. The result is narrower, more concentrated economic momentum (tech and higher-income households) with likely above-target inflation pressures, rising government servicing costs, and mixed implications for the US dollar. Overall, markets may remain buoyant but macro risks and policy uncertainty increase downside volatility.