Market briefs

June 17, 2026

Rates hold firm, for now, under new Fed chair

IN KEVIN WARSH’S FIRST MEETING AS FED CHAIR, the Federal Reserve (the Fed) on June 17 held the federal funds rate steady at 3.50% to 3.75%. The decision dashed any hopes that a change in leadership might prompt immediate rate-cutting and signaled that inflation is at least as big a concern for the Fed right now as stimulating economic growth. Just a week earlier, May’s Consumer Price Index (CPI) showed the annual inflation rate climbing above 4% for the first time in three years.¹

What’s behind the Fed rate decision?

“Conditions have shifted from the start of the year, when two cuts for 2026 seemed likely,” says Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank. The Iran war spiked energy costs and pushed prices for other goods higher, and the U.S. economy has shown remarkable resilience, adding 172,000 jobs in May.² Equity markets, despite heightened volatility, continue to find new highs, and long-term bond yields have risen amid investor concerns over the Middle East and inflation.³

When could we see a rate cut?

The administration supported Warsh as likelier than his predecessor, Jerome Powell, to push for lower rates,⁴ which make borrowing easier and tend to stimulate hiring. Yet sticky inflation generally prompts the Fed to do the opposite, raising rates to slow the economy. “BofA Global Research now foresees no new rate cuts until at least mid-2027, and the chances of a .25% increase in the next year have grown,” Hyzy says. “Moving forward, new economic data will be the most important factor as the Fed balances its dual mandates of full employment and stable inflation.”

How can you respond to periodic volatility?

May’s healthy jobs numbers, while good news for workers and the economy, helped drive a 2.6% drop in the S&P 500 index on June 5 as hopes of a rate cut diminished.⁵ “Investors should expect that sort of choppiness over the next few months,” Hyzy believes. “Yet the job gains, spread across healthcare, logistics, financial services, hospitality and leisure and other industries, reflect strong economic fundamentals,” Hyzy adds. “Stay diversified and consider viewing short-term volatility as a potential opportunity to strategically add to your portfolio,” he suggests.

For bond investors, higher yields offer the potential for meaningful income. “Instead of trying to predict exactly when interest rates and yields may change, explore adding bond duration gradually and emphasizing quality,” Hyzy says. Investors concerned about inflation might consider Treasury Inflation-Protected Securities (TIPS), while high-income investors concerned about taxes may find income opportunities with tax-advantaged municipal bonds. 

Check back here for updates, and tune in regularly to the Market Update audiocast from the Chief Investment Office as interest rates and inflation data evolve.

June 9, 2026

In a year of surprises, what comes next?

AN UNEXPECTED GEOPOLITICAL CONFLICT, A QUICK NASDAQ MARKET CORRECTION, concerns over sticky inflation in the U.S. “With all the tumult, investors are now wondering, “What comes next?” says Chief Investment Officer Chris Hyzy.

He and his team at Merrill and Bank of America Private Bank’s Chief Investment Office (CIO) address that question and many more in the upcoming 2026 Midyear Outlook webcast, “Shifting gears: New drivers of potential market expansion.”

The video above offers a quick refresher of the events that have shaped the investment landscape so far this year and a preview of what could drive the markets over the second half of the year and beyond. Watch it, then save the date to get the full story when the webcast premieres on June 23 at 2 P.M. (ET).

Who’s featured

In the webcast, Hyzy will be joined by BofA Global Research’s head of U.S. Equity and Quantitative Strategy Savita Subramanian and head of U.S. Economics Research Aditya Bhave, as well as the CIO’s head of Portfolio Strategy Marci McGregor, head of Market Strategy Joe Quinlan and head of Cross-Asset Market Strategy Matthew Diczok.

Your questions answered

They’ll share their thoughts on continuing geopolitical unrest, inflation’s impact on bond yields and equity prices,  whether artificial intelligence is still a potential growth opportunity, the effect of the midterms on the markets, and what strategies you can consider for the rest of the year. In the meantime, see if you can answer the questions below.

May 26, 2026

The biggest oil shock: Market resilience

LATEST TALKS BETWEEN IRAN AND THE U.S., if they succeed, could lead to a welcome opening of the Strait of Hormuz. The shutdown has caused history’s greatest oil disruption, affecting some 20% of the world’s supply.¹ So, how has the world thus far avoided an economic crisis? “While higher oil prices and inflation are creating real pain for millions of consumers, several factors have helped to limit its global impact so far,” says Ariana Chiu, investment strategist in the Chief Investment Office (CIO) for Merrill and Bank of America Private Bank.

Which countries are most affected by the oil disruption?

“A robust economy and energy self-sufficiency are supporting U.S. economic stability in the face of the Hormuz oil shock,” Chiu says. Asia, which accepts more than 80% of the oil that moves through the Strait of Hormuz,² and Europe, which sources much of its jet fuel via the passageway, are feeling the brunt, she adds. Yet the global economy has shown surprising resilience, thanks to several forces that together are mitigating about half of the disrupted supply. A recent CIO Capital Market Outlook report, “No two oil shocks are created equal,” explores those forces as well as the risks that could lead to a wider economic crisis.

What has limited its global impact so far?

Chiu points to five key factors helping the global economy weather the oil disruption:

• A prewar “super glut.” Robust 2025 production created an oil oversupply of about 3 million barrels per day at the outset of the conflict.³
• Rerouting. While the Strait of Hormuz remains a key oil conduit, exporters have offset about 5 million barrels a day using alternative pipelines and ports,⁴ Chiu says.
• Strategic reserve releases. In March, 32 Organisation for Economic Co-operation and Development (OECD) nations agreed to release 400 million barrels of strategic petroleum reserves.⁵
• Lower consumption. Global oil use dropped by about 2.3 million barrels per day in April, year over year.⁶ “As gas prices rise, Asian governments in particular have recommended consumers take fewer business trips, work remotely and leverage alternative forms of transportation,” Chiu says.
• U.S. economic and energy resilience. As a net oil exporter, the U.S. is helping to fill the Hormuz gap, with exports rising sharply since the war started to over 6 million barrels per day.⁷

Moves for investors to consider

“For now, financial markets continue to price in a relative de-escalation in the coming months. But the longer the disruption lasts, the greater the risk of a larger hit to economic growth,” says Chiu.  “For investors, we continue to prefer the U.S. in portfolios because of its ability to remain resilient versus other economies.”

Focus on the U.S.: An emphasis on high-quality U.S. stocks may offer a buffer from oil shocks, given U.S. energy self-sufficiency, while also positioning investors to potentially benefit from U.S. economic strength, record earnings growth and artificial intelligence capital expenditures in the long term. That said, it’s important to stay disciplined and diversified across and within asset classes in the face of potentially volatile headlines, Chiu adds, and to rebalance during periods of volatility.

For latest insights from the CIO on the Iranian conflict and its impact on the economy and markets,  tune in to the Market Update audiocast.

May 13, 2026

Interest rates: Up, down or flat under new Fed chair?

EVEN AS LEADERSHIP OF THE FEDERAL RESERVE (the Fed) changes hands, persistent inflation may eliminate chances of hoped-for interest rate cuts through 2026. Kevin Warsh, confirmed by the full Senate on May 13, replaces Jerome Powell, whose term as chair ends on May 15. While the administration backed Warsh, a so-called interest rate dove favoring lower rates, as potentially more aggressive than his predecessor in pushing for cuts,¹ April inflation figures released yesterday show the Consumer Price Index up 3.8% from a year ago, well above the Fed’s 2% target.²

The case for current rate inaction

The latest inflation figures clearly present a challenge for the new Fed chair. Markets welcome interest rate cuts because they stimulate hiring and economic growth and make it easier for businesses and consumers to borrow money. “Yet while the labor market has softened, we haven’t seen an increase in recent layoffs,” says Matthew Diczok, head of Cross-Asset Market Strategy for the Chief Investment Office (CIO). “For the time being, this labor stability enables the Fed to focus on inflation pressures related to energy price spikes from the Iran conflict and tariff uncertainties, rather than unemployment.”

Warsh would need to rally six other Fed governors to vote for a rate cut — a difficult task as long as these conditions persist, he adds. “Markets, in fact, no longer expect rate cuts this year. That’s not necessarily a bad thing, as it highlights continuing economic resilience. Should inflation slow, as expected, it likely just pushes rate cuts into 2027.” BofA Global Research, which had anticipated two cuts in 2026, now believes cuts may not come until mid or late 2027. A rate hike this year is considered unlikely.

The case for future cuts in the Warsh era

While interest rate expectations are always subject to change as economic conditions evolve, rising U.S. economic productivity may allow the Fed to accommodate an extended era of somewhat elevated inflation while maintaining or lowering interest rates to spur growth. Diczok points to the early 1990s, when the Fed allowed inflation to hover around 3.3% amid a tech-related productivity boom.

Today, productivity gains from artificial intelligence (AI) and other technologies are outpacing wage growth and supporting strong equity market performance, Diczok notes. “If productivity gains continue and we are able to work through the current energy crisis and get past tariff uncertainties, that would support the Fed’s ability to resume rate cuts next year.”

In the meantime, he adds, “fixed income investors with excess cash could consider longer term bonds.” In fact, he says, “even short-term maturities don’t look bad right now.” Relative to the rest of the world, U.S. Treasurys and Treasury Inflation-Protected  Securities (TIPS) offer attractive inflation-adjusted yields and fixed income.

For latest insights on the markets, economy and where interest rates might go next, tune in regularly to the CIO’s Market Update audiocast.

April 29, 2026

Rate-decision repeat: Fed stands pat again

THE FEDERAL RESERVE (THE FED) responded to current economic and geopolitical uncertainty by maintaining a wait-and-see approach at its April 29 meeting. In what may be its final meeting with Jerome H. Powell as chair, the Fed kept the federal funds rate at between 3.50% and 3.75%, as it has done since the start of 2026.

When could the cutting cycle resume?

“After three successive Fed rate cuts of .25% at the end of 2025, markets entered 2026 expecting additional cuts to help grow the economy,” says Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank. Then geopolitics intervened. The Iran conflict generated waves of stock volatility, higher energy costs and fears of resurgent inflation.

More recently, a tenuous ceasefire brought lower oil prices and hopes that the conflict would wind down soon. “With labor demand soft and wage growth cooling, we still see room for two rate cuts later this year, especially if inflation remains contained,” Hyzy says. “But everything depends on the economic data and continued de-escalation of the conflict.”

Moving forward, rapid development of artificial intelligence (AI) could make those calls even tougher, he notes. A recent Capital Market Outlook article from the CIO, “AI, Productivity, and R*,” suggests AI productivity growth could pressure rates upward even as AI-related job losses call for cuts.

A more immediate uncertainty: Who will sit as chair for the Fed’s next rate decision, in June? Under Powell, whose second four-year term ends May 15, the Fed navigated pandemic-related economic crises and helped ease inflation from 9.1% in 2022 to 3.1% in February 2026.¹ Yet its 2% inflation target has proved elusive, and the administration, criticizing Powell as too slow to cut rates, has nominated former Fed governor Kevin Warsh as his replacement. Powell has said he will hold his position until a new chair is confirmed.²

Ways to consider positioning your portfolio

“Over the long term, we believe the Fed’s cutting cycle will continue, supporting growth in a U.S. economy that has proven remarkably resilient,” Hyzy says. This could create potential opportunities in the housing, financial and automotive industries, as well as small cap stocks, all of which tend to benefit from lower rates. Fixed income investors could consider adding longer-term bonds to their portfolios to lock in current higher rates. (For more insights on what potential future rate cuts could mean for you, read “Plan ahead to take advantage of Fed rate cuts.”)

But keep in mind that markets and investors are subject to the same uncertainties that are complicating the Fed’s rate decisions. He adds, “The precise timing of Fed decisions matters less than keeping your portfolio diversified across and within asset classes and rebalancing after periods of volatility.” 

For more news and analysis, watch “Four for the quarter: Top questions investors are asking right now,” listen to our latest CIO Market Update audiocast and check here for regular updates on the economy, markets, and where interest rates could be headed next.

April 15, 2026

Will an inflation shock cause emerging markets to falter?

WHEN INVESTORS HEAR “INFLATION SHOCK,” emerging markets (EM) might spring to mind, especially when the catalyst is geopolitical tension with implications for energy prices. The familiar concern: higher oil prices feed inflation, central banks tighten policy, growth slows and EM assets ultimately feel the pressure. But recent inflation dynamics among EM economies may be meaningfully different from past cycles.

The classic risk: energy prices and inflation pressure

A prolonged Middle East conflict could push global inflation higher through energy, commodity, and food prices. This scenario played out in early 2022, when an energy shock driven by the conflict in Ukraine sent inflation across many emerging economies into high single or low double-digit territory, triggering volatility and sharp policy responses in the form of rate hikes. Against that backdrop, it’s reasonable to ask whether another oil spike could lead to a similar outcome.

A different starting point today

The comparison may be imperfect. Across many emerging economies, inflation is starting from a far more contained position than it was in early ’22: data analysis in the Q1 2026 CIO Chart Book shows that in several cases across EMs, Consumer Price Index (CPI) readings have been sitting below central bank targets, potentially reducing the risk of additional tightening even if energy prices spike further.

This distinction matters because it is often the policy response—not inflation alone—that turns price shocks into growth slowdowns. “The starting point of lower inflation changes the equation,” says Lauren Sanfilippo, Senior Investment Strategist for the Chief Investment Office. “Higher energy prices don’t always equate to aggressive tightening for emerging markets.”

A broader view on emerging markets

Despite elevated uncertainty, the overall growth and market outlook has not materially changed, and diversification across regions remains central to portfolio construction, Sanfilippo says.

She adds that in the CIO’s view, EM performance today is a function of more than inflation alone. Currency trends, regional sector exposure, and long-term growth drivers matter just as much. EM Asia is deeply connected to global technology supply chains and AI-related capital investment, while some commodity-producing markets can benefit from higher prices rather than suffer from them.

Revisit the CIO’s outlook on emerging markets from earlier this year:

What this means for portfolios

The CIO continues to view EM equities as offering attractive valuations with improving longer-term fundamentals, even as near-term volatility persists. But, Sanfilippo cautions, emerging markets are no longer a single, uniform story. Inflation and energy risks vary by region, with parts of EM Asia benefiting from technology and AI investment, and some commodity-oriented economies gaining from higher prices. We believe the takeaway for clients is straightforward: consider staying anchored to your EM allocation and using bouts of volatility to rebalance, rather than reacting to short-term swings in oil prices or geopolitical headlines.

Don’t miss the April Viewpoint report for the latest portfolio strategy ideas from the Chief Investment Office. Listen to our latest CIO Market Update audiocast, and check here for regular updates on the broader economy and markets.

March 30, 2026

Private credit turbulence: Optics vs. fundamentals

THE PRIVATE CREDIT MARKET HAS hit some headwinds in 2026, with concerns ranging from lack of liquidity for investors to the impact of artificial intelligence (AI) on corporate borrowers. “Whether you invest in private credit yourself or aren’t sure what the term means, there’s a good chance you have seen headlines warning of a potential meltdown, with implications for the broader economy and markets,” says Rolando Castellanos, head of Alternative Investments Strategy & Implementation for the Chief Investment Office (CIO), Merrill and Bank of America Private Bank.

In a recent CIO Investment Insights report, “Turbulence in Private Credit,” Castellanos explores the latest developments and explains why he believes the more worried predictions may be obscuring private credit’s fundamental strengths and resilience.

What is private credit?

As the name implies, private credit involves loans from non-bank lenders to companies seeking capital for growth or acquisitions—importantly, these loans do not trade in public credit markets and are typically held to maturity by the lender. The most prominent form of private credit, direct lending, involves lending to mid-size companies that may have difficulty accessing credit from traditional banks or public bond markets. Private credit funds have traditionally been open mainly to large institutional investors. In recent years, however, qualified individual investors have been drawn to the asset class’s potential for higher yields and lower volatility compared to publicly traded bonds through newly developed and investor-friendly fund structures. The influx of investor capital, as well as robust demand from corporate borrowers, has contributed to rapid growth. From 2020 to 2023, the U.S. private credit market grew from $46 billion to about $2 trillion.¹

Gauging the recent turbulence

In exchange for higher return potential, private credit (like all investments) comes with risks. “One tradeoff for investors is lack of liquidity,” Castellanos explains. Unlike publicly traded bonds, which can be bought and sold daily in public and generally liquid markets, private credit often requires investors to commit for several years, with strict rules governing when and how investors can remove money.²

Another risk with private credit is the possibility that a company borrowing money encounters financial troubles and defaults on its loans. For example, software companies, which account for about 20% of the direct lending market,³ have been rattled in 2026 over fears that AI might be able to perform many of their functions. Amid these and other concerns, investments flowing into private credit funds have slowed, and more investors have been attempting to remove money,⁴ only to find that redemptions are being limited, delayed or are not accessible.

Keeping things in perspective

“The social media-driven news cycle has focused on gating events at certain private credit funds as a sign of financial distress, when it appears underlying stress is limited and the fund structures appear to be working as intended,” Castellanos notes. “The asset class should always be viewed with a long time horizon, not treated as a liquid instrument. And while investor discomfort with queues is understandable, limits on redemptions help fund managers preserve value.”

Concerns over the underlying health of the private credit market “seem to have more to do with optics than financial fundamentals,” Castellanos believes. “To date, borrower fundamentals have been stable, with revenue, operating profits, margins and coverage ratios [the ability of borrowers to service its debts] steady or modestly improving,” he adds, based on his review of recent data.⁵

Considerations for investors

Private credit turbulence, while real, is just one of many uncertainties – geopolitical risks, inflation, an uncertain job market, and more – capturing headlines today. It’s always important, believes Castellanos, to avoid overreacting to daily news and stay diversified and invested towards long-term goals.

For qualified investors who have invested in private credit or are considering doing so, now may be a good time for a conversation with an advisor, who can discuss whether this asset class makes sense for your situation and goals, and that it is properly balanced with other types of assets in your portfolio, he adds.

Read the Investment Insights article for a closer look at the private credit market. Listen to our latest CIO Market Update audiocast, and check here for regular updates on the broader economy and markets.

March 18, 2026

Understanding the latest Federal Reserve rate pause

AMID MIXED SIGNALS ON JOBS AND INFLATION, the Federal Reserve (the Fed), as widely expected, held steady on interest rates at its March 18 meeting. The decision, which leaves the federal funds rate at between 3.50% to 3.75%, marks the second pause in 2026, following three consecutive rate cuts to close out 2025.¹

Why the pause?

The economy’s surprising loss of 92,000 jobs in February² might have argued for an additional rate cut to stimulate hiring. But surging oil prices since the Middle East conflict started on Feb. 28 have raised concerns that stubborn inflation could reignite — the Fed typically fights inflation by raising rates to cool the economy. “The Fed is walking a fine line between its goals of maximum employment and moderate inflation,” says Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank.

What’s next for the economy and rates?

“While some observers have warned of 1970s-style stagflation, when prices rise while the economy sputters, that’s not our base case,” Hyzy says. “U.S. energy production has made the economy more resilient against oil shocks. And the economy, despite some concerns, remains fundamentally strong.” In addition, Hyzy says, “We expect the current rate-cutting cycle to resume later this year, but the pause will likely continue until the Fed has greater clarity on where the Middle East conflict, and inflation, are headed.”

How can investors respond?

Investors might take a page from the Fed’s playbook by remaining patient and avoiding hasty responses to geopolitically driven volatility, Hyzy advises. “Stay diversified across asset classes and invest with long-term goals in mind,” he adds. “Periodically rebalance and look at temporary declines as potential opportunities to add to your portfolio.”

Read the recent Capital Market Outlook article, “The Stagflation Scenario.” Listen to our latest CIO Market Update audiocast, and check here for regular updates on interest rates and other forces shaping the economy and markets.

March 10, 2026

Navigating a new world of uncertainties in 2026

A WAR-RELATED SPIKE IN OIL PRICES DROVE SHARP VOLATILITY in stocks as markets opened for the week of March 9.¹ Oil briefly topped $100 barrel — 40% higher than before the U.S. and Israel launched missile attacks on Iran on Feb. 28² — raising fears over broader economic impacts if the war widens and drags on. And the Middle East is just one of many concerns in a year of uncertainties. “Investors should expect elevated volatility in the months ahead,” says Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank. “At the same time, it’s important to stay focused on the underlying forces driving long-term growth.”

Seeking signs of stability

In addition to oil prices and stock volatility, the Chief Investment Office will be watching several key market factors in the coming weeks for signs that conditions are stabilizing, Hyzy says. For example, credit spreads (the difference in yield between corporate bonds and U.S. Treasurys of similar duration) have been widening — often a sign of investor concern about the economy. “We’re also closely following inflation, the strength of the U.S. dollar, and bond yields and rates, all of which should help dictate what’s ahead for asset prices in the short and medium term.”

Tracking other uncertainties

Even without the Middle East conflict, other pressures have the potential to jolt investors and markets in 2026. One example: “Midterm elections, coming in November, typically bring higher-than-normal volatility,” Hyzy says. Among the other possible contributors to volatility: the impact of artificial intelligence on the software industry, stresses in the private credit market, the partial government shutdown and its potential impact on the travel industry, the impact of tariffs, and more.

Keeping a long-term focus

While an extended war and persistently high oil prices present risks for the global economy, historically geopolitical events of this nature have had limited long-term impact, Hyzy notes. And the U.S., as a leading energy producer and net exporter of oil, may be less vulnerable than other regions to oil shocks, he adds. As for the other uncertainties, the volatility they may create, while unsettling, will likely be temporary, Hyzy believes. For example, “despite the volatility midterm elections cause, markets historically have hit new highs a year later,” he adds.

“Given all the uncertainties, there’s no clear timetable for market stabilization,” Hyzy says. “We continue to emphasize patience, a balanced, diversified approach, and having a detailed plan to buy or rebalance on weakness.” He advises long-term investors to avoid trying to “time” markets and instead stay focused on broader trends such as corporate earnings growth, rising capital investment, productivity, accelerated innovation and global economic growth. 

For more perspective on the latest market moves, read Hyzy’s Investment Insights article, The Six Senses, from March 9. Listen to our latest CIO Market Update audiocast, and check here for regular updates on the Middle East conflict and other volatility risks as the year progresses.