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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"Q2 2026 delivered a sharp equity rebound led by AI-driven technology strength, with the S&P 500 up 15.2% and emerging markets surging 24.1%. Inflation reaccelerated to 4.2% on energy shocks from Middle East conflict, prompting the Fed to hold rates restrictive."
U.S. equities rebounded sharply in Q2 2026, with the S&P 500 gaining 15.2% driven by AI-related strength in Information Technology, which surged 31.8%. Growth stocks significantly outperformed value, and small-cap equities outpaced large caps, pointing to modest market broadening. Emerging markets led global performance with a 24.1% gain, supported by AI infrastructure demand in Taiwan and South Korea and commodity demand in Latin America. The macroeconomic backdrop reflected reaccelerated inflation, with headline CPI rising to 4.2% driven by earlier energy shocks from the Strait of Hormuz conflict, though oil prices have since moderated. The Fed held rates at restrictive levels amid inflation concerns. Fixed income markets experienced rising yields, with the 5-Year Treasury moving from 3.94% to 4.23%, though corporate credit showed resilience with investment-grade spreads tightening to near multi-year lows. Municipal bonds stabilized after Q1 volatility, supported by strong demand and attractive after-tax yields. Looking ahead, market direction will remain sensitive to inflation, Middle East developments, and the durability of AI-driven earnings growth.
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