Capital Market Outlook

The report highlights that U.S. economic strength remains robust despite trade-dragged headline GDP, supported by record foreign capital inflows and broad-based corporate earnings growth. Inflationary pressures are identified as primarily supply-driven, suggesting the Fed may remain on hold.

Key Takeaways

• 1.Inflation flare-ups are largely driven by supply-side shocks and industry-specific factors rather than broad cyclical overheating.
• 2.The U.S. economy shows strong underlying demand supported by capex and consumer spending, with a widening trade deficit primarily driven by technology-related imports.
• 3.Foreign demand for U.S. securities remains at record highs, positioning the U.S. as a premier destination for global capital.

Table of Contents

• Macro Strategy—Divergences, Shocks, and Inflation Dynamics
• Market View—Market Snippets: U.S. Real GDP Growth and Exceptional Foreign Demand for U.S. Assets
• Thought of the Week—A High Hurdle for Q2 Earnings
• Portfolio Considerations
• Divergences, Shocks, and Inflation Dynamics
• Market Snippets: U.S. Real GDP Growth and Exceptional Foreign Demand for U.S. Assets
• A High Hurdle for Q2 Earnings
• Markets in Review

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