U.S. Economic growth has proven resilient despite higher levels of inflation. At the same time, stronger-than-expected corporate earnings have helped propel markets to new highs, even as investors contend with geopolitical uncertainty, higher energy prices, and elevated interest rates.
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Hear directly from the Office of the CIO on updated views, key trends, and strategies to help navigate the second half of the year.
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Key Takeaways from our Mid-Year Outlook
- The economy remains resilient, although leadership is becoming narrower and more selective.
- Business investment, artificial intelligence, and higher-income consumers are carrying an increasing share of the growth burden.
- Inflation, energy prices, and Federal Reserve policy remain the principal macroeconomic swing factors.
- Within equities, we favor quality and durable earnings; within fixed income, we continue to prioritize high-quality income and tax-aware opportunities.
- Alternatives can play an important role in enhancing diversification, income generation, and inflation resilience.
- Broad portfolio diversification and disciplined positioning remain essential as volatility risks stay elevated.
Read the full report here or explore individual sections below.
Macroeconomic Outlook: A shifting foundation of economic growth
The U.S. economy remains resilient, though on a go forward basis growth leans more heavily on business investment as consumer strength moderates.
Equities Outlook: Strength supported by earnings growth
Equity gains have been driven by better than expected earnings growth rather than valuation expansion, providing a more durable investment framework on a go forward basis The AI investment cycle remains a primary driver.
Fixed Income Outlook: Higher rates offer greater income potential
With yields at attractive levels, fixed income can provide a meaningful source of return and portfolio diversification. We favor high-quality credit and municipals.
Private markets and alternatives: Selective opportunities
An active IPO market, increasing demand for infrastructure, and shifting dynamics within private credit are supporting a constructive outlook for select private market strategies.
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Neither asset allocation nor diversification guarantees a profit or protects against a loss.
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