Midyear Outlook for Equities & Fixed Income

Описание: In this episode, Collin Martin and Liz Ann Sonders focus on the outlook for equities, fixed income, and the overall U.S. economy in the second half of 2026. They begin by discussing recent inflation data, noting that while CPI remains elevated, core inflation came in slightly better than expected.

Both agree inflation is not quickly returning to the Fed's target, but easing expectations and stable inflation expectations suggest the Federal Reserve can remain patient for now. The key risk is whether higher prices, especially at the pump, begin to erode consumer spending, as real wages have turned negative year over year.

From a policy perspective, Collin expects the Fed to stay on hold through year-end, despite the fed funds futures market pricingin a potential hike. He emphasizes that short-term yields should remain steady, while longer-term Treasury yields may stay elevated due to persistent inflation, heavy Treasury issuance, and global rate pressures. In this environment, he suggests favoring short-to-intermediate bond durations and selectively considering credit risk via investment-grade corporates, high yields, and preferred securities.

Liz Ann focuses on the outlook for equity investors, highlighting a shift back to a negative correlation between bond yields and stocks—more characteristic of inflation-driven regimes. Her midyear forecast points to a solid economic backdrop, led by resilient GDP growth, strong capital spending tied to AI, and a healthy labor market, though some early warning signals are emerging in survey-based employment data.

The episode closes with a cautious but constructive outlook: no immediate recession signals, but investors should consider prioritizing diversification, risk management, and periodically rebalancing as markets navigate inflation, policy uncertainty, and evolving leadership trends.

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Important Disclosures

This material is intended for general informational and educational purposes only. This should not be considered an individualized recommendation or personalized investment advice. The securities, investment products and investment strategies mentioned are not suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decisions.

All expressions of opinion are subject to change without notice in reaction to shifting market, economic or political conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Past performance is no guarantee of future results.

Investing involves risk, including loss of principal.

Performance may be affected by risks associated with non-diversification, including investments in specific countries or sectors. Additional risks may also include, but are not limited to, investments in foreign securities, especially emerging markets, real estate investment trusts (REITs), fixed income, municipal securities including state specific municipal securities, small capitalization securities and commodities. Each individual investor should consider these risks carefully before investing in a particular security or strategy.

Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors. Lower rated securities are subject to greater credit risk, default risk, and liquidity risk.

Treasury Inflation Protected Securities (TIPS) are inflation-linked securities issued by the US Government whose principal value is adjusted periodically in accordance with the rise and fall in the inflation rate. Thus, the dividend amount payable is also impacted by variations in the inflation rate, as it is based upon the principal value of the bond. It may fluctuate up or down. Repayment at maturity is guaranteed by the US Government and may be adjusted for inflation to become the greater of the original face amount at issuance or that face amount plus an adjustment for inflation. Treasury Inflation-Protected Securities are guaranteed by the US Government, but inflation-protected bond funds do not provide such a guarantee.

Preferred securities are a type of hybrid investment that share characteristics of both stock and bonds. They are often callable, meaning the issuing company may redeem the security at a certain price after a certain date. Such call features, and the timing of a call...