Report published June 2, 2026
Capital Market Outlook: Macro Strategy and Investment Insights (June 2026)
Merrill A Bank of America Company · June 2, 2026
The report argues that current high Treasury yields are sustainable because they reflect robust economic growth and AI-driven productivity rather than an impending recession. It maintains an overweight position on Equities while warning that shifting stock-bond correlations require more sophisticated diversification strategies.
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Finvaulta summarizes Merrill A Bank of America Company's analysis. Attribute opinions, forecasts, time-sensitive values, and chronology to the issuer and report date; do not treat this page as an independent verification or a current market-data source.
Key Takeaways
- 1.Current higher Treasury yields are being driven by stronger growth and productivity rather than recessionary fears, making them 'tolerable' for risk assets.
- 2.The traditional inverse relationship between stocks and bonds has weakened as inflation uncertainty becomes a dominant force, necessitating a more dynamic approach to diversification.
- 3.Equities remain overweight, supported by double-digit earnings growth and AI-related capital investment despite geopolitical and energy shocks.
Table of Contents
- Macro Strategy—Higher Yields Tolerable, Not Recessionary
- Market View—Stock-Bond Correlations Are Shifting: What It Means for Diversification
- Thought of the Week—Four Stats for Five Months
- Markets in Review
- Portfolio Considerations
- Index Definitions
Report data
Long-Term Correlations Reflect Shifting Macro Regimes
| Metric | Estimate | Context |
|---|---|---|
| S&P 500 YoY EPS Growth | 28.4% | Fastest pace of earnings growth since Q4 2021. |
| 10-Year Treasury Yield High | 4.67% | Yield reached the top of its established 3-year range. |
| U.S. Real GDP Forecast | 2.1% | Economic growth expectation used for strategy committee views. |
Reports in this series
Capital Market Outlook is shown in chronological order through this edition, published on June 2, 2026.
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