Advisors know that each new year brings with it the potential for surprises. In fact, unexpected events are one of the only guarantees in the world of investing.

With 2026 right around the corner, it’s worth remembering no market participant possesses a crystal ball, but figuring out some of the sources of next year’s surprises isn’t a difficult task. In the U. S. alone, there’s the possibility the labor market will continue weakening and there could be drama when it comes to replacing Jerome Powell at the Federal Reserve. Oh yeah, it’s a midterm election year, too.

In other words, next year is likely to be another one when expecting the unexpected will prove wise. Now onto how to prepare for 2026 surprises. J. P. Morgan Asset Management (JPAM) has some ideas regarding next year’s surprises, some of which are directly investable. Before diving in, it’s worth acknowledging the asset manager did pretty well with its 2025 surprise list.

Those theories included emerging markets bonds soaring (check), junk bonds beating investment-grade corporates (a near win) and the year range for 10-year Treasury yields being 75 basis points or less (close).

JPAM’s 2026 Surprises

One of the three fixed-income related surprises JPAM offers up for 2026 is that the Treasury yield flattens out to the 10-year maturity while yielding less than 3%. For advisors and investors wanting a little more glamor with bonds next year, don’t fret because JPAM has a couple of other realistic surprises that could materialize.

One is high-yield credit spreads, or the compensation investors demand to buy those bonds over Treasuries, will continue narrowing. That’s actually good news because it implies default rates will be low, which in turn implies the U. S. economy is on sound footing.

“Corporate fundamentals are strong, and the technical picture looks positive as well. Maturity walls have been extended well past 2026, and the dominant driver of supply has been refinancing,” observes JPAM. “In addition, a rising share of the capital stack is secured, and defaults remain low. The index continues to skew toward high quality as the emergence of private credit has absorbed the marginal borrowers that typically financed themselves in the public HY market at this point in the cycle. ”

The asset manager also sees the share of the share of issuers in the Emerging Market Sovereign Bond index (EMBIG) with negative spreads relative to Treasuries tripling. It’s not a stretch because about 12% of that index yields no more than 0. 50% (in many cases less) above Treasuries. Look to the Middle East for potential additions to this interesting bond club.

“We think the most likely candidates for negative spreads are Middle East issuers,” adds JPAM. “There is a massive local buyer base, strong fundamentals supported by oil revenues and likely a certain element of national pride to have their bonds trade through Treasuries, not unlike what China achieved with its dollar bonds. ”

Gold and the Dollar Rally

In the commodities complex, gold was an epic story in 2025 (silver was even better) and it’s possible bullion breaks even more records next year. JPAM says it’s possible the yellow metal will ascend to $5,000 per troy ounce.

That’s not a stretch because gold often rallies after Fed easing, which just arrived and more is expected next year. What’s interesting is that the asset manager sees the dollar strengthening in 2026, which in theory would be a headwind to dollar-denominated commodities, including gold.

“It appears that the dollar smirk was a short-lived phenomenon and the smile has re-emerged. More recently, the dollar appears to be strengthening on risk-off, even when led by U. S. AI-themed equities,” concludes JPAM. “Going back to 1970, the all-time high for the DXY was above 160 in 1985. The subsequent dollar peak was above 120 in 2001. The local high in this cycle was in September 2022 at 114, about 14% above the current level and where we would benchmark ourselves. ”