Global Research Highlights: Take a hike

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Global Research Highlights: Take a hike

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Global Research Highlights

Take a hike

Investment Strategy

Fed hikes are now on the horizon 26 June 2026

The global economy will likely be tested by tighter financial conditions emanating from Global

the US. The labor market firmed up and inflation dynamics have deteriorated in the US.

While some one-offs are partly to blame, and tariffs should soon roll off, most of the BofAS

FOMC seems to be losing patience after 5 years of high inflation. We have been clear Derek Harris

that the economy was not asking for cuts and there is a lot of uncertainty on how the Portfolio Strategist

BofAS

Fed will operate, but we now expect 75bp of Fed hikes this year, starting in September. +1 646 743 0218

derek.harris@bofa.com

What would stop the Fed from hiking? Thomas Hopkins

First, a sharp slowdown in payrolls this summer could push the u-rate up. Second, a few PortfolioBofAS Strategist

soft core PCE prints could start dragging the y/y rate down. Third, a major equity sell-off thopkins2@bofa.com

could preclude hikes by slowing demand significantly, given K-shaped spending. Last, Evan Morris

there’s Warsh. Perhaps he was strategically hawkish to gain credibility, but we think he’s PortfolioBofAS Strategist

just buying time until inflation falls or his task forces make the case to stay on hold. evan.morris@bofa.com

Justin Devery

Prefer mid>small in 2H PortfolioBofAS Strategist

So far YTD, small caps have largely shrugged off Fed cuts getting priced out and a hike justin.devery@bofa.com

getting priced in. Consensus earnings estimates have been revised up 13% YTD, helped See Team Page for List of Analysts

by macro strength, the manufacturing recovery finally taking hold and benefits from

higher oil.