A midyear review of the economy and markets allows investors and experts to ask: How did our initial expectations play out?  

Each year, our Investment Policy Committee releases their outlook for the coming year, based on their economic analysis and expectations for market behavior and direction.

How does Our View of 2026 (outlined in the photo below) hold up at midyear? And what do we anticipate for the second half of 2026? 

Overall, the way our investment experts approached the first half of the year proved beneficial for aggregate client returns across our investment platform.  

Below, we dive into some notable topics within each of our three expectation categories — Increasingly Optimistic, Neutral, and Risk & Uncertainty — assessing what we anticipated, what happened, and what we foresee for the second half of 2026.  

Increasingly Optimistic 

Geopolitics  

With the Iran war and tensions in the Middle East, were we wrong to be “increasingly optimistic” about geopolitics in 2026?  

We anticipated tensions, but our optimism surfaced in the belief that, even with short-term commodity volatility (as we saw with the roller coaster of oil prices), there would be minimal risks to capital markets. This has remained true.  

Second half of 2026: Geopolitics will likely dominate headlines in the second half of 2026, even more than in the first half. However, we believe the impact on capital markets will remain limited, and there is no reason to exit the equity market.  

Oil & Energy 

We anticipated thematic investment opportunities this year because of the energy needs of ever-expanding AI infrastructure and data centers. These opportunities materialized, and we continue to take advantage of them.  

Second half of 2026: Energy demand will remain substantial and continue to create investment opportunities we can use to position our clients for success.  

Neutral 

Equity Market Participation 

Stock market performance broadened meaningfully this year. Anticipating this, we shifted away from a market-cap approach and are leaning into the average stock, not just the top names.  

Alongside our ongoing risk and tax management strategies, this choice has led to performance across our investment platform.  

Second half of 2026: If the market starts favoring larger names and/or the broader economy begins to slow down (we do not anticipate a full stop), we will consider moving back to a market-cap approach to take advantage of performance in growth-oriented stocks.

Interest Rates & Inflation 

In late 2025, the economic narrative touted the expectation of interest rates dropping substantially throughout 2026 because of a slowdown in the economy. We took the contrarian stance, being vocal that bonds currently carry more risk than stocks. That’s been our message over the past 3-4 years because of the instability of interest rates.  

Bonds exist to protect investors from the downside of equities, but if they carry more risk and capture similar downside, their usefulness derails.  

As such, we shrunk fixed-income allocations to the lowest possible levels within each client’s investment management style. We diverted those assets to equities in a low-risk manner, believing that was the safer, more strategic choice. 

Second half of 2026: After our conservative approach to fixed income in the first half of 2026, we will consider increasing duration and enhancing the probability of capturing a greater return profile in bonds.

Risk & Uncertainty 

Consumer Spending & Labor Market Dynamics 

In the first half of 2026, the future of the labor market and consumer consumption was uncertain, and it remains so.  

We are starting to see labor market cracks, but those cracks are not the same as gaps. Overall, the labor market has proven resilient, riding momentum from 2025. Regardless, our investment experts remain vigilant to any necessary adjustments. 

Second half of 2025: In response to the state of the labor market and the uncertainty around it, our Investment Policy Committee is revamping their tactical and strategic equity market allocations and decision-making process. These shifts will allow them to stay ahead of the labor market and its bearing on stocks.

Policy and Global Trade 

At the start of the year, our uncertainty around policy and global trade centered on tariffs and interest-rate pressure.  

These were valid uncertainties, but in the second part of the year, we’re shifting our focus to the midterm election. Midterm election volatility has a unique and repeatable seasonality profile we see every two years.  

Combining our knowledge of this seasonality profile, the shifting dynamics of the labor market, and the broadening returns of the equity market, we have a blueprint to navigate the end-of-year election season. For example, we are prepared for slightly higher volatility profiles in stocks and bonds and higher trade policy volatility.  

Second half of 2026: The performance profile of our aggregate equity platform has been excellent this year, even net of fees and taxes. However, Credent’s equity selection will be more risk-centric going forward as the Investment Policy Committee pivots in an attempt to replicate our recent return profile while being open to new data from consumer spending, the labor market, and policy changes.

For more insights about how to prepare your unique plan and portfolio for the second half of 2026, reach out to a member of our team using the form below.  

To read more like this, review “Credent’s 2026 Economic Outlook & Market Expectations.” 

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