Earnings trump everything, bonds can wait

Research evidence excerpt

Earnings trump everything, bonds can wait

FICC Research

Global Macro

25 June 2026

Investment Outlook

Earnings trump everything, bonds SIGNATURE

can wait

A durable US earnings cycle – supported by AI capex – keeps Ajay Rajadhyaksha

equities attractive despite full valuations. Absent an earnings +1 212 412 7669

ajay.rajadhyaksha@barclays.com

collapse, which we don't expect, equities should outperform BCI, US

fixed income yet again this quarter. Amrut Nashikkar

+1 212 412 1848

amrut.nashikkar@barclays.com

We have expended much ink in the Macro Outlook making the case that the US earnings cycle is BCI, US

broad, durable, and self-reinforcing. It is pulling the labor market forward, helping the

consumer, and being turbocharged by the largest infrastructure build-out in a generation. Themistoklis Fiotakis

+44 (0) 20 7773 2002

If that assessment is even roughly correct, equities remain the preferred asset class even if themos.fiotakis@barclays.com

Barclays, UKvaluations seem stretched after the rally of the past two months. Markets are not cheap.

Investors expect continued double-digit earnings growth into 2027, and the margin for

disappointment has narrowed since our last publication.

But expensive is not the same thing as wrong. Equities can be fully valued and still outperform if

the earnings trajectory holds. And every data point we have examined in this overview, from

corporate profits to AI capital expenditure to the firming jobs market, points to a trajectory that

is intact; we just upgraded our FY26 S&P 500 EPS forecast to $337. The scenario in which

equities become a sell is one where earnings growth collapses, and we see no plausible catalyst

in the third quarter. Until one emerges, we believe fighting the profit cycle is a losing strategy.