Inflation

The fixed income landscape continues to offer real opportunity this year as well as persistent, events-driven uncertainty. Still, cutting through the headlines, investors can find major opportunities inside the portfolios and in adding new funds.

The risks of a rate hike have increased lately, but we don't believe we're there just yet. If the data changes—specifically if inflation comes in hotter-than-expected over the next few months—we'll likely change our view.

All told, global equities are near all-time highs, despite the sharp June-July semiconductor drawdown. Fundamentally, an eye-popping 50% Q2 SPX earnings growth rate fuels the rally. Of course, it has been a perfect storm of sorts for domestic large-cap profitability. ​

Among the key benefits of the ETF wrapper is the wide range of tools it gives advisors and investors to build tailored fixed income portfolios. And given today’s complex rate and inflation environment, it certainly helps to have a wide range of options available.

There’s been no summer vacation for the bond market this year. It seems there’s a new headline every day that needs to be processed and responded to. In terms of Treasuries (UST), yields at the back-end of the curve have risen in notable fashion and have resulted in rates being at levels not seen in almost twenty years in some cases.

Equities opened the week higher after Treasury Secretary Scott Bessent signaled on Monday morning that a deal to reopen the Strait of Hormuz could be reached within a day or two.

The market was jolted by a much weaker-than-expected employment report, sending Treasury yields sharply lower as investors quickly reduced the odds of another Federal Reserve rate hike. At first glance, the payroll number looked alarming, particularly when combined with sizable downward revisions to prior months and unexpectedly soft wage growth.

Municipals posted their weakest July return in more than two decades. The Bloomberg Municipal Bond Index returned -1.85%, underperforming most investment-grade fixed-income sectors and marking just the fifth negative July return over the past 30 years.

Stocks moved higher as stronger economic data, solid corporate earnings and easing geopolitical concerns helped support investor optimism.

Demand continues to outpace record supply. Municipal bonds remain an attractive income opportunity in a market where the Federal Reserve (Fed) is likely to remain on hold and carry is driving returns. Despite record issuance of roughly $50 billion per month, demand has remained strong, supported by a reinvestment wave that is running approximately 40% above last year and favorable summer technicals.

Tech and AI are driving a greater share of global equity market returns and earnings growth, raising concentration risks and the need for broader diversification.

The S&P 500 has closed at a new record high some 25 times this year, the most recent taking place just last week. The benchmark, which is now up about 13% — as measured by the performance of the State Street SPDR S&P 500 ETF (SPYM) in 2026 — has been boosted by momentum, solid earnings and ongoing economic growth.

Good or bad, right or wrong, estimates suggest that in the past eighteen months the net flow of immigrants (including the number of illegal immigrants who were deported) may have been negative. By contrast, in the prior four years the US took in more than eight million immigrants, on net. All these numbers could be revised or argued with over time.

Despite spending much of the past three months moving sideways, the S&P 500 broke out to the upside this week, notching its 25th record high of the year. While leadership has shifted beneath the surface, one constant has been the strength of corporate earnings.

Fifty-eight billion dollars. That’s what the Department of War just awarded Lockheed Martin for PAC-3 interceptors, the missiles that have been knocking Iranian ballistic missiles out of the sky for the past five months. It’s one of the largest munitions awards in U.S. history.

US equity market leadership underwent a rotation in July, with previous leaders turning into laggards and vice versa.

We provide research and advice on asset allocation, the selection and weighting of various investment categories. Subject to internal review and governance, our recommendations guide the investment decisions in our family of mutual funds and institutional client portfolios.

“Sound money,” in its purest form, is money whose supply a government cannot expand at will. Under a gold standard, every dollar is a claim on a fixed weight of gold. You can’t print gold. So the government can’t monetize its deficits, and the money supply grows only as fast as miners pull metal out of the ground, historically around 1.5% a year.

Chris Galipeau discusses high-conviction insights that go beyond media headlines.

The AI capital expenditure cycle remains solidly on track to eclipse the telecom boom of the late 1990s and become the largest investment cycle since the railway buildout of the 19th century in inflation-adjusted terms. T

Fixed income markets continue to adjust to an evolving policy backdrop following last week’s Federal Reserve meeting.

Lots has been written about the strength of the US economy not translating into improvement in the different measures of consumer confidence and consumer sentiment over the last several years.

While long-term interest rates have been trending higher driven by a combination of persistent inflation, Fed uncertainty and geopolitical conflict, earnings growth this year has been very strong. If the trend continues, earnings could continue to help equity markets outpace rising interest rate and inflation risks.

US 10-year Treasury yields have climbed roughly 50-basis points since the start of 2026. This is not an inflation scare. Despite the sharp rise in energy prices following the outbreak of war with Iran, market-based measures of medium-term inflation expectations have drifted lower.

The S&P 500 was flat in July 2026 as semiconductors fell 29%, energy gained nearly 13% on higher oil, and long-term Treasury yields reached their highest levels since 2007.

Investors remain cautious despite bullish positioning, as rotations curb speculation while record margin debt and high equity allocations raise longer-term risks.

Given the current state of inflation and interest rates, it’s probable that many advisors and investors are considering alternative ways of fostering income within their portfolios.

Reflecting on the first half of 2026 provides a clear roadmap to strategize for the remainder of the year. Before that can occur, however, it’s imperative to check the pulse on the current state of the market and posit what may happen next.

While the outcome of the July FOMC meeting itself was in line with expectations, the aftermath has proven to be far more challenging for the money and bond markets, especially for longer-dated maturities, a.k.a. duration. Investors, as well as Fed Chairman Warsh, have quickly discovered something we have been highlighting about over the last few months: a lack of forward guidance can have unintended consequences.

On Wednesday afternoon the Federal Reserve held interest rates steady for a fifth consecutive meeting, and stocks buckled: the Dow fell 1,153 points, its worst day since April of last year.

By repeatedly describing standard inflation gauges as “imperfect measures of underlying inflation,” Federal Reserve Chair Kevin Warsh has pushed a long-running technical debate into the center of the policy conversation: What is the best way to measure underlying inflation?

This year has offered a vivid reminder of how quickly market conditions can shift—from policy uncertainty, to a sharp geopolitical shock, to a focus on an AI-driven rally. As the themes of the day changed, the case for an overlay persisted.

When we talk about inflation, we usually focus on the Consumer Price Index (CPI). However, the Federal Reserve’s “preferred” inflation measure is the Personal Consumption Expenditure (PCE) index. What’s the difference and why does the Fed prefer the PCE?

July 2026 was a flattish month for markets. The S&P 500 index was down slightly. Value did well, while momentum did poorly. Smallcaps, midcaps, and emerging markets, all of which have been the year’s best performers, had a bad month. Commodities, driven largely by oil prices, led the pack, as the fragile ceasefire in Iran failed to hold.

The numbers are in, and the story of ETF adoption goes on undeterred. In July, ETFs saw their third month this year of asset inflows exceeding $190 billion. If 2025 was a record-breaking year for ETF asset creation, 2026 is promising to upstage it.

Many of the most critical components of AI infrastructure are produced by a small and increasingly consolidated group of highly specialized companies.

While the Fed left interest rates unchanged, Treasury yields moved notably higher throughout the week, with 30-year yields eclipsing their highest levels in nearly two decades as investors reassessed the outlook for inflation and monetary policy. The S&P 500 ended 1.06 percent higher to close a volatile week of trading, recovering from a mid-week sell-off.

Kevin Warsh considers fewer Fed meetings, the Fed holds rates steady, the Senate moves to avert a shutdown, a new BLS chief is confirmed, and midterms near.

LPL Research highlights strong corporate earnings, AI-driven growth, and a favorable equity outlook while monitoring inflation, oil prices, and risks.

July was an eventful month for both domestic and international markets, with US-Iran tensions flaring up, increasing energy prices and changing investor expectations for the Federal Reserve (Fed) cutting rates.

The financial markets expected the Federal Reserve to leave interest rates unchanged at its recent meeting, and it did just that. However, three members of the FOMC dissented, voting to raise rates by 25bps in an effort to combat stubbornly high inflation.

The Federal Reserve’s preferred gauge of price inflation is set for a methodological update, as the Bureau of Economic Analysis (BEA) is expected to implement revisions to its price index for Personal Consumption Expenditures (PCE) as early as September.

State Street's July Flash Flows report highlights record ETF inflows, and a major rotation into value and dividend strategies.

This summer has offered little opportunity for a lull. Investors have contended with Federal Reserve (Fed) policy uncertainty, renewed tariff-driven inflation concerns, escalating tensions in the Middle East, questions about the durability of AI-related investment spending and a packed earnings calendar.

The market spent much of this week trying to interpret what Fed Chair Kevin Warsh meant rather than what he actually said and that was entirely avoidable. The decision to leave rates unchanged was defensible. What wasn’t defensible was Warsh’s lack of explanation.

Just as important, the dollar and U.S. Treasuries have continued to behave like hedges in periods of broader market unrest (driven by geopolitics or other conditions). When risk assets come under pressure, Treasury yields have generally fallen, or the dollar has tended to find support.

Lately, it seems like you can’t open a financial publication without stumbling across another article declaring the 60/40 portfolio dead. The pitch is everywhere: bonds are broken, the old rules no longer apply, and investors should modernize by swapping the bonds in their portfolio for Bitcoin, gold, or whatever alternative the asset management industry is currently selling.

The latest earnings reports from Big Tech have laid bare a growing divide in the market's appetite for massive AI spending.

Kevin Warsh became Fed Chair barely ten weeks ago. He has presided over just two sets of monetary meetings and held two press conferences. Nonetheless, more than any chairman since at least Alan Greenspan, he has come under harsh criticism by the press right out of the gate.

In January 1790, the House of Representatives put a simple question to its new Treasury Secretary: what should America make for itself? Alexander Hamilton took almost two years to answer.

Advisors and investors of all kinds are used to closely watching the outcome of each of the Federal Reserve’s meetings, given how critical interest rates are to equity and fixed income markets alike. However, the recent July Fed meeting was particularly crucial. Many were uncertain what direction the central bank would go with interest rates.

The US economy grew less than expected during the second quarter of the year, up 1.5% quarter over quarter, dragged down by strong growth in imports. However, final sales to private domestic purchasers increased by 3.9%, underscoring the strength in domestic demand, which continues to rely too heavily in AI investment spending and strong spending from high-income consumers, or what has been called the K economy.

Market volatility—and the feelings of uncertainty that follow—tend to frighten investors. Yet for investors with an overlay program, one approach to volatility is evergreen—rebalancing.

Chris Galipeau discusses high-conviction insights that go beyond media headlines.

This week’s vote from the Federal Reserve FOMC committee is going to have implications for quite some time. I think most of the pundits who are writing about this have their analysis wrong. This was not just a vote to not raise rates. I think there was a lot more going on behind the scenes.

Schwab Sector Views is our six- to 12-month outlook for stock sectors, which represent broad sectors of the economy. The Schwab Center for Financial Research (SCFR) combines a factor-based approach with a market and economic assessment to determine the ratings.

One of the most noteworthy data points during July was the June CPI report. While some moderation in price pressures was expected, the actual ‘cooling’ in inflation that was reported was greeted as a long sought after welcome development by the financial markets.

Energy markets have reached a precarious moment, with the path of prices over the remainder of the year – and potentially beyond – hinging on two key questions.