2Q 2026 Market Commentary

Economic Backdrop

The first half of 2026 was defined by a positive market environment interrupted by a short but volatile geopolitical conflict starting February 28 between the US and Iran that spiked energy prices and fear, though most markets quickly reverted to pre-conflict trends. Indeed, had one stepped away from the markets for March and April, most markets would have seemed steady. Annualized core inflation of 2.9% in May remained higher than the Federal Reserve’s 2.0% target, while CPI including energy and food was 4.2% for the same period.¹ Comments from newly appointed Federal Reserve Chairman, Kevin Warsh, reduced expectations for Fed Funds Target Rate cuts in 2026, demonstrated an important degree of political independence, and foreshadowed changes in how the Fed communicates.² And while US equity markets have been concentrated since 2023 on those companies investing their earnings most heavily into Artificial Intelligence, the first half of 2026 reveals significant capital investment into AI via public debt, private debt, private equity, and private infrastructure.³

1. Consumer Price Index News Release – 2026 M05 Results ↩︎
2. Federal Reserve issues FOMC statement ↩︎
3. Syntrinsic 2026 Mid-Year Capital Markets Sentiment ↩︎

Authors