US Monthly Outlook Private Credit Public Risks

MUFG's June 2026 outlook highlights a fragile US economy sustained by AI optimism and high-earner wealth effects, while projecting two Fed rate cuts contingent on the reopening of the Strait of Hormuz.

Key Takeaways

• 1.The US economy remains fragile with Q1 2026 GDP revised down to 1.6%, showing a disconnect between high-earner spending and declining real household incomes.
• 2.Fed rate cut expectations are highly contingent on the status of the Strait of Hormuz and its impact on oil prices, with two cuts still expected if the strait reopens and oil prices drop.
• 3.Private Credit has become the marginal provider of credit in the US economy, particularly for middle-market firms and AI investment, creating a significant macro connection and risk for insurers.

Table of Contents

• Summary of Views
• Section 1: Macro Musings
• Section 2: Fed & Rates View
• Section 3: Market Thoughts
• Section 4: Special Topic: Private Credit: A Macro Connection
• Section 5: Forecasts