An exclusive conversation with Michael Heise, Chief Economist at HQ Trust

Global markets are navigating some of the most complex dynamics in decades. Trade wars that never fully ended, ballooning public debt, and unpredictable policy moves have created an environment where traditional forecasting tools seem almost obsolete.

For investors (Especially family offices), the question is clear: How do you position for growth in a world where the rules keep changing?

To answer that, we spoke with Michael Heise, Chief Economist at HQ Trust and former Chief Economist for Allianz SE, Dresdner Bank, and DZ Bank. With decades of experience advising global institutions, Heise offers a candid view on where the world economy is headed, what investors often get wrong, and why technology could be the silver lining in an otherwise cloudy outlook.

“Policy uncertainty and trade conflicts have weakened global growth in 2025, and they will continue to shape the outlook in 2026,” says Heise. Trade negotiations, particularly between the US and its major partners like China, Japan, and the EU, remain unsettled. Even existing agreements have expiration dates that leave room for more turbulence. And then there’s debt. Years of heavy government spending have pushed public debt to historic highs. “The debt issue has returned full force,” Heise warns. “It’s likely to keep long-term bond yields elevated, especially in the US.”

Why Diversification Has Never Been More Critical

In a world where geopolitical and policy risks seem to defy prediction, diversification isn’t just a strategy; it’s a survival skill. “We are not talking about classical risk, where you can calculate probabilities,” Heise explains. “This is uncertainty in its purest form. There’s no historical experience that tells you how things may play out. In such a situation, diversification across regions, sectors, and asset classes is absolutely essential.”

Central Banks: Walking a Tightrope

The Federal Reserve faces a delicate balancing act. So far, tariff-related inflation in the US has been muted, but Heise warns that it’s only a matter of time before higher costs for inputs like steel, aluminium, and copper filter into consumer prices. 

“This will put the Fed in a very difficult position,” he notes. “I expect at most one rate cut this year and perhaps two more in 2026.” Europe is a different story. Inflation is weak, giving the ECB room to manoeuvre. “I expect another deposit rate cut, probably in September, bringing it down to 1.75%,” says Heise. “That leaves a significant rate gap between the US and the Eurozone.”

Why Family Offices Need to Watch the Big Picture

Macroeconomics, often overlooked in favour of micro-level decisions, is gaining new relevance in family office strategy. “You need to assess whether shocks (like COVID, the Ukraine war, or trade fights) cause lasting damage or if economies bounce back,” Heise explains. “Macroeconomic resilience is the foundation of financial market resilience.” Periods of uncertainty often trigger emotional decisions. “Investors tend to act procyclically,” Heise observes. “They sell in a downturn when markets may already be near the bottom, or they buy during a boom when valuations are stretched. A strong macroeconomic framework can help avoid these mistakes.”

There’s Still Reason for Optimism

Despite the chaos, Heise remains upbeat about one transformative force: technology. “Advances in Artificial Intelligence will significantly boost productivity in the coming years,” he says. “We’re already seeing the effects in the US. China is also advancing rapidly, and while Europe lags, adoption is happening. That makes me optimistic about productivity and income growth, even against strong headwinds.”

The Bottom Line

The global economy is navigating uncharted waters. Persistent trade disputes, high debt, and geopolitical shocks have made the future harder to predict than ever before. Yet the message from Michael Heise is clear: stay diversified, stay disciplined, and don’t underestimate the power of technological progress to drive long-term growth. For family offices and long-term investors, resilience will depend on one thing above all - seeing beyond the noise to the forces that truly shape tomorrow’s opportunities.