Consumer & Retail: Reinvestment propels another cut

Research evidence excerpt

Consumer & Retail: Reinvestment propels another cut

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Consumer & Retail

Reinvestment propels another cut

Industry Overview

Banks upbeat on Consumer, CAG cuts dividend with FY27 20 July 2026

Banks kicked off 2Q earnings season last week with results largely beating expectations. High Grade Credit

We believe readthrough for the Consumer was incrementally positive as spending is United States

steady (despite continued caution at the lowest income tier) but delinquencies are down Retailing & Consumer

alongside loan loss reserves, and account conditions (savings, wages, investment/loan Brian Callen, CFA

growth) are buffering against higher inflation. However, AI-related volatility continued to Research Analyst

weigh on markets last week spurred by emerging foreign competitors leaving the S&P BofAS+1 646 855 8987

500 -1.7% and spreads slightly wider. In economics, June CPI was +3.5% y/y (vs. +3.8% brian.callen@bofa.com

est.), cooling from +4.2% y/y in the prior month, while U.S. retail sales increased +6.7% Avantika Pedamallu

y/y, in line with expectations. Preliminary UMich consumer sentiment improved to 54.4 ResearchBofAS Analyst

in July, above 50.5 estimate. Overall, the ICE BofA IG Index widened +2bps w/w +1 646 855 7557

avantika.pedamallu@bofa.com

(+0.06%). Cyclicals (flat) and Non-Cyclicals (+1bp) were in-line, returning +0.12% and

+0.07%, respectively. New issuance was $48.6bn for the week (financials-led).

In Food (+1bp), Conagra Brands (CAG) 4Q26 earnings missed our est.’s across organic Exhibit 1: Markets w/e 07/17/26

sales and EBITDA margins, but leverage was in-line and FCF beat via cash conversion Last week's market performance

and lower capex. As anticipated (albeit with sharper depth), new CEO Brase reset FY27’s Market Value WoW