Capital Market Outlook

Latest edition · October 5, 2026

ME cio weekly letter

The U.S. economy continues to demonstrate resilient growth and productivity gains, supporting corporate earnings despite elevated bond yields and acyclical inflation pressures. Record foreign portfolio and direct investment inflows underscore continued confidence in U.S. capital markets.

Revised economic data show accelerating U.S. GDP and strong productivity that buffer corporate margins against persistent energy and freight cost shocks. At the same time, benchmark 10-year Treasury yields have surged past 5.25%, pressured by supply shocks, high fiscal issuance, and normalizing Japanese yields. While Treasury Secretary Scott Bessent faces simultaneous challenges across the yen, bond yields, and the conflict with Iran, record foreign capital inflows into U.S. equities and direct investment reaffirm U.S. economic exceptionalism, keeping the CIO overweight U.S. equities.

Key takeaways from the latest edition

• 1.The U.S. economy remains sturdier than expected with revised upward GDP and strong productivity, supporting corporate earnings despite higher borrowing costs.
• 2.Treasury yields have surged above 5% driven by a mix of stronger growth, inflation premiums from fuel and freight disruptions, and funding pressures from large fiscal deficits.
• 3.Foreign capital inflows into the U.S. are reaching all-time highs, with $942B in rolling 12-month net equity purchases and projected record FDI of $480B in 2026.

What this series covers

• Macro Strategy—Stronger Growth, Costlier Money
• Market View—Yields, Yen and Iran: What Haunts the “House”
• Thought of the Week—When It Comes to Attracting Foreign Capital, the U.S. Remains Exceptional
• Markets in Review

Edition archive

• ME cio weekly letter

  October 5, 2026

• ME cio weekly letter

  September 28, 2026

• ME cio weekly letter

  September 8, 2026

• ME cio weekly letter

  August 31, 2026