Market Commentary

• The storm has not passed. The market stopped flinching. Oil is back above $100, long-end yields sit near multi-decade highs, and the Fed, Bank of England and Bank of Japan all set policy this week. Equities are near records anyway, with emerging markets leading at 24.6% year to date.

• Wednesday's hike is priced. The calendar is the question. Fed funds futures put a 25 basis point increase at 91.5%, with roughly 95 bps of tightening priced through next September. The chair has called 2% a hard target. Seven weeks before midterms, Wednesday tests the words.

• Energy is the inflation floor. Brent above $100 with the Strait of Hormuz constrained, September CPI priced above 3.5% as more likely than not, and recession odds of 7%. Strong growth plus an energy price floor is why the Fed's hand is being forced, not chosen.

• Japan is competing for capital again. A Japanese investor can now earn about 3% on a 10-year JGB versus about 2% on a Treasury hedged back into yen. Japan holds roughly $1.1 trillion of Treasuries, so even a small shift home matters at the long end.

• Dispersion is the year's real story, and AI demand runs on deployment. Value leads growth by 18 points year to date. Two-thirds of large enterprises have doubled token use in a year, and 86% would expand usage if prices fell by half. A voluntary frontier slowdown tests the training-capex leg of the trade, not the inference leg.

Through 8/25/2026, the equity tape stayed constructive even as leadership rotated hard. The S&P 500 gained 4.39% over the past month and sits at 13.77% YTD, but the style gap is the real headline: Russell 1000 Value has returned 24.57% YTD while Russell 1000 Growth has managed just 5.12%. International has kept pace, with MSCI EM up 24.57% and MSCI EAFE up 14.44% YTD. Sector leadership tells the same rotation story: Energy leads at 40.39% YTD, followed by Materials (18.02%) and Info Tech (24.12), while Utilities (2.54%), Communication Services (0.23%), and Consumer Discretionary (-0.95%) bring up the rear. Fixed income is still fighting the long end: the U.S. Aggregate is flat at 0.11% YTD, Treasuries off 0.16%, and corporates barely negative at -0.01%, while short TIPS (+0.76%) and municipals (+0.58%) squeezed out gains. A tape where value, energy, and short duration lead is a tape that has stopped waiting for rate cuts, which is where the Fed comes in.

Through 6/30/2026, equities finished a strong first half with a soft June. The S&P 500 returned 10.19% YTD despite slipping 0.95% on the month. Style and region told the real story: Russell 1000 Value led at 16.22% YTD while Russell 1000 Growth trailed at 5.33%, a reversal of the pattern that dominated recent years. International participated, with MSCI EAFE up 9.90% and MSCI EM, the standout, at 24.00% YTD. In fixed income, the U.S. Aggregate returned a muted 0.62% YTD while municipals gained 2.32%. The front end stayed firm as rate-cut expectations faded. At the sector level, Industrials (20.15% YTD) and Info Tech (19.76% YTD) led, while Consumer Discretionary (-0.77%) and Financials (-1.31%) lagged. Source: Bloomberg.

April was the snapback. The S&P 500 gained 12.72% for the month and 9.95% quarter-to-date, erasing the early-year drawdown to put the index up 5.17% YTD and 31.33% over the trailing year. Growth led the bounce as Russell 1000 Growth rose 16.29% in April versus Value at 8.37%, though Value still leads YTD at 8.69% to Growth's 1.57%. 

The market has logged serious mileage in 2025. Equities have delivered robust returns: the Russell 1000 Growth Index leads with a (+26.9%) one-year gain, the S&P 500 is up (+18.3%), and EM equities (+21.3%) have surged as global breadth improves. Sector leadership remains concentrated in Communication Services (+43.9% YTD) and Technology (+28.5% YTD), while Health Care (-11.6% YTD) has lagged.

The latest U.S. strikes on Iran have thrust investors back into the ancient arena of fear and opportunity. Headlines, threats, and safe-haven bids pile-up, yet we look to history to remind us that markets often prevail long after swords are sheathed and sanctions are re-drawn. As with every geopolitical drama, the first reaction is rarely the final verdict.