Thus far 2026 has been a roller coaster year for fixed income markets. The 10-year Treasury, the benchmark rate for the bond market, saw its yield trade as low as 3.94% and as high as 4.43%.
RiverFront’s Investment Team is proud to present the summary of our 2026 Outlook, which will be released this Friday, December 19th. In 2025, the tech-heavy US stock market rode a wave of AI awareness and spending.
The three themes we laid out will take a few years to play out, if at all. Our portfolio positioning reflects our belief in the economic strength and momentum of the US Tech / AI trade, and we would want to see more policy clarity and earnings confirmation before we make any large shifts into international.
To analyze the impact of the Fed’s rate cut on the bond market, we are going to look at the impact of Treasuries maturing between 2 and 10 years and Treasuries maturing between 10 and 30 years. We will explore the month prior to the Fed’s September meeting and the month after, in order to understand the full impact of the Fed’s decision to cut rates.
We’ve received many client questions about seasonality in stocks, and specifically about the ‘September Effect’. This is the theory that investors should sell their stocks after Labor Day to avoid autumn volatility.
From a revenue perspective, we were also encouraged by sales coming in +2.1% higher than analysts expected, with all 11 sectors showing positive revenue surprises. This also allays our fears that tariff impact might be worse than the analyst community feared.
Since the last update of our three ‘Tactical Rules’ on June 17th, both domestic and international equity markets have rallied, increasing roughly 6.9% and 3.7%, respectively.
The day of reckoning is here. Earlier in the summer, the Trump Administration set a global trade deal negotiation deadline of August 1.
While the market has successfully looked through concerns over tariffs, it is important to note that this is still a dynamic situation.
While both valuation and technical factors suggest to us that the dollar may continue to weaken in the near-term, we would caution investors against reading too much concerning the US’ long-term economic stability into further dollar weakness.
The first half of 2025 has been driven by headlines that have caused volatility in both the stock and bond markets. While tariff negotiations have commanded the most attention, we are now pivoting to the federal budget deficit, which feels like a perpetual headline over the last 15 years.
This past week, news flow around policy came in hot and heavy, with President Trump’s ‘Big, Beautiful’ tax cut bill passing the House of Representatives, and Trump threatening 50% tariffs on the European Union (EU).
The April Consumer Price Index (‘CPI’) report was released last Wednesday and gave the Federal Reserve another positive data point in its inflation fight, as did Thursday’s negative Producer Price Index (‘PPI’).
Currently, the Three Tactical Rules are a “flashing yellow light” - a roughly neutral rating which represents a slight downgrade.
U.S. defensives and international lead.a
The tariff chaos continues … but the economy remains intact. For now.
The stock market sell-off appears to be signaling a recession. However, we believe the bond market disagrees.
Since our last update of our ‘Three Tactical Rules’ on February 4, equity markets have been under pressure as the S&P 500 has retraced more than 23% of the rally that started October 2023.
Recent US stock weakness may be related to a downturn in US economic data and headline shocks related to tariffs.
We view quarterly earnings season as a critical checkup on how markets are handling current challenges.
The U.S. economy remains structurally productive. American Economic Exceptionalism is powered by innovation and labor flexibility.
Long maturity treasuries can provide downside protection to offset equity risk, in our view.
Since our last update of our ‘Three Tactical Rules’ on November 26, 2024, equity markets are up slightly.
For stocks, Christmas came with a 'Santa Clause' rally soon after the election. Since then, there's been a correction in US markets.
U.S. equities closed 2024 on top and U.S. growth took back leadership from U.S. value.
Riverfront's stock selection team performs analysis on individual equities that provides useful insights into how we position our portfolios.
The Fed could be ‘slower to lower,' while the Trend continues to rise, with an overly optimistic Crowd due to seasonality and post-election trends.
In Europe, the ECB stimulates a sluggish economy while in the UK, the problem is inflation. In contrast, the US responds to stronger growth.
The period from 1956-1966 offers lessons we can apply to today's bull market, regarding technological progress, market fundamentals and more.
We are excited to release our October 2024 Chart Pack, our visual quarterly designed to walk investors through what’s happening in markets.
Quarterly recap: Fed rate cut and Chinese stimulus take the spotlight.
Flashing green light – crowd will determine path forward.
The bond market is overextrapolating recession risk.
What history can tell us about seasonal returns.
In our view, stagflation scenarios tend to be worse for balanced portfolios than recessions.
With US payroll and unemployment data surprising to the downside two Fridays ago, Treasury markets quickly repriced the probability of impending recession, helping set off a volatility spike in stocks across the world. According to Bloomberg, economists’ consensus probability of a US recession in the next twelve months is now approximately 30%.
Since our last update of the Three Tactical Rules on June 25, 2024, equity markets have retraced most of the rally from the spring. The change in market sentiment came abruptly, due to the labor market showing signs of weakness as the number of jobs available per unemployed worker fell to 1.2 and the unemployment rate rose to 4.3%. The recent market volatility has had a dramatic impact on our tactical rules.
We expect inflation and rates to remain higher than the last decade. We favor tech within growth and cyclicals within value.
Since World War II, the US Dollar (USD) has served as the world’s preeminent ‘reserve currency’ – the means of exchange for most of the rest of the world to do business.
