Outlook 2026: Mid-Year Update
Overview
The Mid-Year Update offers the Janney Investment Strategy Group’s baseline prognostications for the economy, the equity and fixed-income markets, their evolution, and investment implications for the remainder of 2026.
Economy & Equity Markets
Mark Luschini, Chief Investment Strategist
The domestic economy continues to expand and has the momentum to continue for the foreseeable future. Gross Domestic Product (GDP) is a measure of the total value of goods and services produced. Its growth rate is driven in large part by consumer consumption patterns. To be sure, business spending chips in as well, as does the government, plus there are factors associated with trade and inventory adjustments. Importantly, its pace has quickened since the fourth quarter of last year, and current estimates from two notable institutions, the Atlanta and New York Federal Reserve Banks, indicate it will be sustained throughout the second quarter of this year. Inside the GDP report is a component known as Final Sales to Private Domestic Purchasers, which strips away government spending and the volatile measures of trade and inventory balancing, giving a cleaner picture of household and business spending. That figure has also firmed since the end of last year and, like the GDP estimate, looks to remain stout going into the year’s second half.
Fixed Income & Interest Rates
Guy Lebas, Chief Fixed Income Strategist
In our 2026 Outlook, we argued that interest rates would remain within a range for much of the trading year, with a bias toward modestly lower rates, largely due to late-year rate cuts by the Federal Reserve (Fed). The reasons for this outlook were several. First, the labor market looked fragile with flagging job growth. Second, the disinflation trend following the post-COVID price spike was continuing apace. Third, the Federal Reserve was facing new leadership with a probable dovish bias.
This is for informative purposes only and in no event should be construed as a recommendation by us or as an offer to sell, or solicitation of an offer to buy, any securities. The information given herein is taken from sources that we believe to be reliable, but is not guaranteed by us as to accuracy or completeness. Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation, or needs of individual investors. Employees of Janney Montgomery Scott LLC or its affiliates may, at times, release written or oral commentary, technical analysis, or trading strategies that differ from the opinions expressed here.
Returns reflect results of various indices based on target allocation weightings. Weightings are subject to change. Index returns are for illustrative purposes only and do not represent the performance of any investment. Index performance returns do not reflect any management fees, transaction costs, or expenses. Indexes are unmanaged, and you cannot invest directly in an index.
Performance data quoted represents past performance and is no guarantee of future results. Current returns may be either higher or lower than those shown.
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This presentation has been prepared by Janney Investment Strategy Group (ISG) and is to be used for informational purposes only. In no event should it be construed as a solicitation or offer to purchase or sell a security. The information presented herein is taken from sources believed to be reliable, but is not guaranteed by Janney as to accuracy or completeness. Any issue named or rates mentioned are used for illustrative purposes only and may not represent the specific features or securities available at a given time. Preliminary Official Statements, Final Official Statements, or Prospectuses for any new issues mentioned herein are available upon request. The value of and income from investments may vary because of changes in interest rates, foreign exchange rates, securities prices, and market indices, as well as operational or financial conditions of issuers or other factors. Past performance is not necessarily a guide to future performance. Estimates of future performance are based on assumptions that may not be realized. We have no obligation to tell you when opinions or information contained in Janney ISG presentations or publications change.
