Blog

Taking a Look at Managed Futures

What’s Trending in Managed Futures

Michael McClain | Alternative Investment Research Analyst and Due Diligence
Last Updated: June 09, 2026

Strategy Background

Managed futures strategies, defined as systematic, trend-following funds managed by Commodity Trading Advisors (CTAs), have delivered compelling risk-adjusted returns in the alternatives investment strategy universe through the first half of 2026. The sustained directional moves due to the AI-driven equity rally, Middle East conflict, and stickier inflation have combined to deliver a diversified long/ short trading environment across asset classes. For comparison, a market with limited meaningful trends across asset classes and marked by consistent reversals is often a worse case scenario for the average medium-term trend-follower.

Current Positioning

As of the beginning of June, the managed futures industry has built up several noteworthy positions that current investors should be monitoring:

Equities: Long — But Asymmetrically Risky

Trend-following funds remain net long global equities, with the AI-driven rally in the U.S. driving much of the recent increase in long exposure. The near-term outlook for equity positioning carries notable asymmetry, as a sustained market decline could trigger significant selling pressure, and potentially amplify any drawdown.

Commodities: Energy Trends Continue

Long oil and gold have been the main contributors to returns, however, both markets have declined from recent highs; with gold experiencing a significant move down after briefly breaking through the $5,000 level. Elevated geopolitical risk premiums, central bank demand, dollar weakness, and rising fiscal deficit concerns all provided fundamental tailwinds to the technical trend. A sustained trend across several futures contracts in this sector would provide an attractive source of diversification from the trends in the equity and bond markets.

Fixed Income: Short and Building

There has been a consistent build-up in short bond exposure over the course of the year, as inflation remains above target and any thought of a rate cut has shifted to a rate hike. This is a meaningful change in positioning from where most trend-followers entered the year, and it reflects the degree to which the macro narrative has repriced.

Currencies: Mixed U.S. Dollar Signals

In currencies, trend-following strategies have maintained a short U.S. dollar bias, though the strength of that trend has begun to soften. Long positions in the Australian dollar and Mexican peso versus the dollar have been profitable, while the one consistent long U.S. dollar exposure has been against the yen. The dollar weakness theme has been supported by a combination of fiscal deficit concerns, tariff uncertainty, and a relative growth deceleration narrative that gained traction in Q1 and early Q2. However, with U.S. inflation remaining sticky at elevated levels and the Federal Reserve increasingly hawkish, a dollar stabilization, or partial reversal, is a credible scenario that could pressure the current short book. Currency trend signals tend to be among the slower-moving in a managed futures portfolio, meaning a meaningful shift in dollar direction would take time to generate a signal flip, but investors should be alert to a potential squeeze if the macro backdrop shifts abruptly.

LPL Research Takeaway

Managed futures have offered persistent, cross-asset trends, providing diversification, and delivering compelling returns amid macro uncertainty. The risks, including trend reversals, crowded equities, and potential regime shifts, should be watched as we enter the second half of the year and warrant position-sizing discipline.

As always with systematic strategies, discipline comes not from predicting when trends will end, but from ensuring that risk management frameworks are robust enough to capture the reversal signal without giving back an outsized portion of the gains. We continue to view managed futures as a core diversifier within a well-constructed alternatives sleeve, and the 2026 environment has reinforced rather than undermined that view.

Important Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Asset Class Disclosures –

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

Bonds are subject to market and interest rate risk if sold prior to maturity.

Municipal bonds are subject and market and interest rate risk and potentially capital gains tax if sold prior to maturity. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor’s holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

For Public Use – Tracking: #1120564

June 9, 2026
Weekly Market Commentary | Is Bad News Priced Into the Bond Market? | June 8, 2026

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Market adjustments and yields: Fixed income markets have absorbed significant geopolitical and economic developments in recent months, particularly since the escalation of the Iran conflict. Treasury yields have risen sharply, reflecting a combination of higher growth expectations, elevated term premia, and a notable repricing of monetary policy.

Inflation and economic resilience: Yet this adjustment has occurred without a breakout in long-term inflation expectations or a collapse in economic data. This dynamic suggests that a substantial portion of potential bad news — higher-for-longer rates, persistent but contained inflation pressures, and geopolitical risk — may already be embedded in current pricing.

Fed policy and duration outlook: Investors appear to have recalibrated their views on the terminal rate for this cycle and the neutral fed funds rate, moving closer to more hawkish Federal Open Market Committee (FOMC) members’ perspectives. At the same time, stable inflation expectations give the Federal Reserve (Fed) the flexibility to remain on hold rather than react preemptively. This environment supports a cautious — but not outright bearish — outlook for duration, with yields likely past peak levels.

Recent Yield Movements Amid Geopolitical Tensions

Since the onset of the Iran conflict (through last Friday’s close), the U.S. Treasury curve has experienced a meaningful bear flattening with front end yields rising more than back-end yields. The 10-year Treasury yield has increased by approximately 60 basis points (bps), while the 2-year yield has risen by 77 bps. These moves represent a swift repricing that incorporates several factors: rising inflation expectations tied to energy price volatility, an increase in compensation demanded for uncertainty (known as term premia); and a fundamental reassessment of the path for short-term policy rates.

That the increase in yields is not solely a function of inflation fears is important (as discussed later). Market participants have also layered in expectations for stronger real growth in the near term, possibly supported by ongoing investment in the artificial intelligence buildout. Simultaneously, geopolitical risks and fiscal concerns have contributed to higher term premia, reminding investors that rate volatility could remain elevated.

Importantly, these yield increases have been orderly. Despite the geopolitical catalyst, liquidity in core fixed income markets has held up, with no evidence of acute stress in funding markets or forced selling. This resilience underscores that the market is processing information in a measured and efficient way.

To Hike, or Not to Hike, That is the Question

One of the most striking developments has been the rapid shift in expectations for Fed policy. After last Friday’s stronger than expected jobs report, markets are now pricing in roughly a 100% probability of a rate hike sometime this year, with a 67% chance of two hikes by June 2027. This marks a sharp reversal from earlier in 2026, when investors were expecting multiple rate cuts.

The implied neutral fed funds rate has been revised higher to around 4%, bringing market pricing closer in line with more hawkish FOMC member views than with the previous median expectation. Even Fed Governor Chris Waller, often viewed as a relative dove, has publicly acknowledged that a rate hike may be warranted under certain conditions. This signals that the Fed’s policy optionality is flexible: policymakers retain the ability to hike if data warrant it, but it is not compelled to do so unless the inflation outlook deteriorates.

Markets Have Priced in a Full Fed Rate Hike by December 2026

_{Source: LPL Research, Bloomberg 06/05/26

Disclosures: Past performance is no guarantee of future results.}

This repricing reflects a maturation of market thinking. Rather than assuming the post-pandemic cycle would mirror previous easing cycles with a low neutral rate, investors now appear to accept a structurally higher rate environment. Resilient labor markets, sticky services inflation, and recognition that productivity gains or demographic shifts may have modestly increased the long-term equilibrium real rate support this view. That said, we’re still of the view that the Fed can potentially cut rates once this year (likely December), but this certainly depends on the depth and duration of the Iran conflict/oil prices, which remain the biggest challenge to cuts. We don’t agree with market pricing suggesting a hike is likely this year as the bar for a hike is much higher than a Fed on hold for an extended period of time. So, with Fed officials generally more hawkish, the question becomes have they increased their hawkish rhetoric to help tighten financial conditions (aimed at staving off a hike) or is there a real chance the next move could be a rate hike? Time will tell, but the Fed arguably isn’t behind the curve, as in 2022.

The Fed Can Be Patient…For Now

Despite the front-end repricing and near-term inflation risks from energy markets, long-run inflation expectations remain well anchored. This is a critical distinction: near-term inflation pressures from geopolitical events are being viewed as transitory, while structural price stability expectations remain firm.

This anchoring is a key reason why the Fed can remain patient. Unlike the 2022 experience, when the central bank was clearly behind the curve and inflation expectations were rising alongside actual inflation, markets today appear prepared to “look through” temporary price spikes. For example, breakevens have moved modestly higher but remain consistent with modest overshoots of the Fed’s 2% target rather than a sustained shift higher. Forward inflation swaps and longer-dated breakevens reinforce this view.

The Fed’s credibility, rebuilt through its aggressive tightening in 2022–2023 and subsequent data-dependent approach, provides a buffer. As long as expectations stay anchored, the bar for an actual rate hike remains relatively high, even if markets are pricing in some probability of one — reducing worst-case-scenario risks and supporting the case that much of the bad news on inflation is likely already priced in (absent a reacceleration in oil prices).

Unlike in 2022, Inflation Expectations Remain Well Anchored

_{Source: LPL Research, Bloomberg 06/01/26

Disclosures: Past performance is no guarantee of future results.}

Higher Yields: A Mix of Inflation and Real Growth Expectations

Nominal Treasury yields can be decomposed into components reflecting real growth expectations and inflation compensation. Analyzing the move in the 10-year yield since the start of the Iran conflict shows that the majority of the increase (approximately 35 bps) stems from rising growth expectations, with a smaller portion (only about 14 bps) tied to higher inflation expectations.

This is an important distinction. The growth-driven component suggests markets are pricing in a “soft landing plus” scenario or at least continued economic resilience rather than outright stagflation. Higher real rates reflect confidence in growth, likely supported by productivity or fiscal stimulus effects.

Consequently, even if oil prices decline after geopolitical uncertainty eases, any meaningful drop in the 10-year yield may be limited unless economic data warrants a deeper than expected rate-cutting cycle. Yields have risen on the back of better-than-feared growth, not runaway inflation — a distinction that matters for the trajectory of rate volatility going forward.

10-Year Nominal Yield Broken Out by Inflation and Growth Drivers

_{Source: LPL Research, Bloomberg 06/05/26

Disclosures: Past performance is no guarantee of future results.}

Resilient Data, Steady Demand

Recent macroeconomic data and Treasury auctions reinforce the view that markets have absorbed bad news well. Incoming data has generally surprised to the upside (per the Bloomberg Economic Surprise Index), demonstrating economic momentum that has exceeded consensus expectations in several areas, helping keep the broader narrative of resilience intact.

Economic Data Has Been Better Than Expected Recently

_{Source: LPL Research, Bloomberg 06/01/26

Disclosures: All indexes are unmanaged and cannot be invested in directly. Past performance is no guarantee of future results.}

Also, recent auctions of 2-year, 5-year, and 7-year Treasuries, totaling $183 billion, were met with adequate demand. While not exceptionally strong, they were far from weak. Foreign participation and domestic investor interest proved sufficient to absorb supply without pushing yields significantly higher intra-auction. This suggests that investors are reasonably comfortable with prevailing yield levels. In combination, both factors underpin the case that current yields reflect a balanced assessment of risks rather than panic pricing. This week’s $119 billion (total) in Treasury auctions of 3-year, 10-year, and 30-year Treasury securities will provide another real time test to determine if yields are sufficient to attract necessary demand.

Conclusion

The Treasury market has priced in a potential rate hike, reset the neutral rate higher, and built in a meaningful term premium — all while long-run inflation expectations remain anchored and macroeconomic data have held up. A substantial amount of bad news appears to already be reflected in prices. Absent a resurgence in oil prices or a sharp acceleration in growth, the recent surge in yields is likely behind us, although longer-maturity Treasury yields should remain elevated near current levels in the near term, in our view.

In summary, fixed income markets have demonstrated remarkable efficiency in incorporating geopolitical shocks and policy repricing. With much of the adjustment likely already behind us, the risk-reward profile for core Treasuries appears more balanced than headline yield moves might suggest.

Asset Allocation Insights

LPL’s Strategic and Tactical Asset Allocation Committee (STAAC) maintains a neutral stance on duration relative to benchmarks. Our proprietary duration models show mixed signals, pointing toward neutral positioning, which strikes the appropriate balance. We would reconsider and potentially add duration if the 10-year yield were to push into the 4.75–5.00% range or if the curve steepened materially from current levels, which would represent an attractive entry point given the anchored expectations backdrop.

The STAAC maintains its recommendation for a tactical equity overweight and fixed income underweight. This reflects an expectation of further easing of geopolitical and commodity supply concerns as a result of the U.S.-Iran conflict, alongside a more cautious outlook for select areas of core fixed income. Overall, our tactical views emphasize a modest equity overweight expressed via a defensive factor tilt, a continued focus on quality bond sectors, caution in rate‑sensitive fixed income sectors, and an ongoing allocation to diversifying strategies and alternatives. Within fixed income sectors, we remain underweight investment grade corporates and mortgage-backed securities (MBS) as spreads remain tight relative to historical standards, diminishing the risk/reward profile of the sectors.

Important Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

All investing involves risk, including possible loss of principal.

US Treasuries may be considered “safe haven” investments but do carry some degree of risk including interest rate, credit, and market risk. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.

The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The PE ratio (price-to-earnings ratio) is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. It is a financial ratio used for valuation: a higher PE ratio means that investors are paying more for each unit of net income, so the stock is more expensive compared to one with lower PE ratio.

Earnings per share (EPS) is the portion of a company’s profit allocated to each outstanding share of common stock. EPS serves as an indicator of a company’s profitability. Earnings per share is generally considered to be the single most important variable in determining a share’s price. It is also a major component used to calculate the price-to-earnings valuation ratio.

All index data from FactSet or Bloomberg. All index data from FactSet or Bloomberg.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Guaranteed | Not Bank/Credit Union Deposits or Obligations| May Lose Value

For public use.
Member FINRA/SIPC.
RES-0007122-0526 Tracking #1120258 | #1120259 (Exp. 06/2027)

June 8, 2026

Weekly Market Performance | June 5, 2026

LPL Research
Last Updated: June 05, 2026

LPL Research provides its Weekly Market Performance for the week of June 1, 2026. Stocks started June on a volatile footing, ending Wall Street’s nine-week winning streak amid a mix of geopolitical tensions, shifting interest rate expectations, and cooling artificial intelligence (AI) driven momentum. U.S. equities initially pushed to new highs on tech strength but reversed as rising oil prices, higher Treasury yields, and disappointing corporate forecasts (relative to high expectations) dampened sentiment. International markets followed a similar pattern, with Europe pressured by weaker economic data and rate hike speculation, and Asia weighed down by fading tech optimism. Meanwhile, bond yields climbed on stronger-than-expected economic data, and commodities were mixed.

Stock Index Performance

Index	Week-Ending	One Month	Year to Date
S&P 500	-2.72%	1.58%	7.72%
Dow Jones Industrial	-0.30%	3.20%	5.86%
Nasdaq Composite	-4.49%	1.72%	10.84%
Russell 2000	-3.38%	-0.86%	13.65%
MSCI EAFE	-2.68%	-0.05%	6.21%
MSCI EM	-6.05%	-1.45%	17.80%

S&P 500 Index Sectors

Sector	Week-Ending	One Month	Year to Date
Materials	-1.41%	-2.01%	9.67%
Utilities	-0.41%	-4.94%	3.24%
Industrials	0.37%	0.65%	11.87%
Consumer Staples	1.22%	-1.80%	7.84%
Real Estate	1.74%	1.26%	11.32%
Health Care	2.32%	5.13%	-1.43%
Financials	1.18%	1.08%	-4.91%
Consumer Discretionary	-6.20%	-4.37%	-2.58%
Information Technology	-4.97%	7.05%	17.40%
Communication Services	-4.52%	-5.12%	4.08%
Energy	2.82%	-3.10%	27.89%

Fixed Income and Commodities

Indexes and Commodities	Week-Ending	One Month	Year to Date
Bloomberg U.S. Aggregate	-0.11%	0.22%	0.26%
Bloomberg Credit	-0.12%	0.48%	0.55%
Bloomberg Munis	0.46%	0.83%	1.81%
Bloomberg High Yield	-0.11%	0.35%	1.57%
Oil	3.24%	-11.81%	57.07%
Natural Gas	-2.34%	15.24%	-12.83%
Gold	-4.79%	-5.14%	0.07%
Silver	-9.49%	-6.45%	-4.90%

Source: LPL Research, Bloomberg 6/5/26 @3:35 p.m. ET
Disclosures: Indexes are unmanaged and cannot be invested in directly.

U.S. and International Equities

U.S. Equities: Five days of relatively choppy trading left Wall Street on track to snap a historic nine-week winning streak. After closing out strong monthly gains for May, the S&P 500 faced a few moving pieces to start the month of June between a ramp in hostilities in the Middle East and crosscurrents in the AI theme. Early in the week, major averages picked up right where they left off last month, scoring with fresh records on the back of tech shares in response to NVIDIA (NVDIA) CEO Jensen Huang announcing the chipmaking giant’s move into the PC market, while also dismissing software disruption concerns. However, rising oil prices and Treasury yields placed an overhang on equities on renewed negotiation uncertainty and a brief escalation in Israeli-Hezbollah hostilities in Lebanon, while U.S.-Iran strikes tested the temporary ceasefire again.

Nonetheless, corporate updates may have been the biggest directional driver. Shares of Alphabet (GOOG/L) dropped after the Google-parent company announced an $80 billion equity raise to fund AI spending plans. In the following sessions, chipmakers succumbed to downside pressure after their outsized rally in response to semiconductor maker Broadcom’s (AVGO) revenue forecast falling just shy of Wall Street’s lofty expectations — sparking concerns that the latest AI rally may have run too hard. Stocks went on to end the week on a risk-off note as a result of the colliding dynamics, with additional pressure from rate hike expectations after May payrolls data cruised past consensus forecasts.

International Equities: The STOXX 600 European regional index ended modestly lower as rising crude prices kept a lid on risk taking to start the month of June. Among regional headlines, hawkish-leaning European Central Bank commentary combined with flash consumer inflation data indicating accelerating price pressures last month, broadly dampened sentiment. Investors also assessed a fresh potential headwind from a proposed 10% U.S. levy on imports from the U.K. and the European Union. Elsewhere, consumer discretionary names outperformed on positive consumer spending takeaways from earnings reports, while the heavyweight banking sector lagged after multiple institutions reportedly suspended account opening for mainland China clients as a part of regulators’ cross-border crackdown.

On the other side of the globe, major Asian markets ended mostly lower. South Korea led declines as dented AI sentiment on Friday poured cold water on the KOSPI’s red-hot chip-fueled rally, wiping out weekly gains. Moves elsewhere were more measured in comparison. Taiwan edged higher despite Friday’s selling, while Japanese benchmarks ended mixed as the Nikkei clung to mid-week tech gains and the Topix ticked lower as U.S.-Iran deal uncertainty continued to weigh on exporters. Greater China reversed gains driven by tech excitement for Tencent’s potential AI agent for the popular WeChat service after the project met regulatory hurdles, while banks dropped on developments in authorities’ cross-border crackdown.

Fixed Income, Currency, and Commodity Markets

Fixed Income: Core bonds, as measured by the Bloomberg Aggregate Index, traded lower this week. Within Treasury markets, the week was bookended by a rise in yields as the curve generally continued to be directionally driven by rising oil prices amid flaring tensions around the Middle East. However, despite crude prices cooling heading into the weekend, Friday’s Treasury selloff was particularly notable as shorter-dated yields jumped as much as 13 basis points (0.13%) as market pricing for Federal Reserve (Fed) rate hikes received a jolt from much stronger than expected May payrolls data. Rate hike expectations in global markets also continued to underpin yields. In our view, given that longer-term inflation expectations remain well anchored, the Fed is not likely behind the curve. While market pricing for a potential rate hike received another boost Friday, the bar for central bankers to tighten monetary policy is likely higher than it appears, and market pricing in the Treasury market may currently be too hawkish.

Commodities and Currencies: The broader commodity complex traded lower, erasing fairly muted weekly gains on Friday. With geopolitical tensions in the Persian Gulf and U.S.-Iran peace talks still front and center across asset classes, crude oil prices continued to dominate headlines for the complex. West Texas Intermediate (WTI) printed a healthy advance in response to clashes in the Middle East — even after trimming gains to end the week on remarks from Washington that negotiations with Tehran are progressing well. But Friday’s losses were limited as investors still await concrete progress, and the Strait of Hormuz remains closed. While oil was still the focal point for market chatter, a drop in precious metals weighed on the complex. Gold deepened weekly losses as a potential rate hike would pose a headwind for the non-yielding yellow metal, while silver posted even sharper losses. In currencies, the U.S. dollar index rallied back near 100 into the weekend on rate hike speculation while the euro weakened as investors flocked to the greenback.

Economic Weekly Roundup

Highlights from Friday’s Payrolls Report

Job demand was especially strong in healthcare and leisure and hospitality sectors. Payrolls contracted in residential construction, financial services, and retail trade.
Payroll activity was mixed in May as retail trade shed workers across most subcategories. But relative to longer trends, retailers have kept payrolls stable at roughly 15.5 million across the country.
The unemployment rate was unchanged at 4.3% and remained in a narrow range of 4.3% to 4.5% since mid-2025.
The labor force participation rate held at 61.8% in May, and the employment-population ratio changed little at 59.2%. These measures showed little change over the year, after accounting for annual population control adjustments.
Financial activities employment declined by 22,000 in May and is down by 107,000 since a recent peak in May 2025.
Over the year, average hourly earnings have increased by 3.4%, not quite the pace of inflation in recent months. We could expect impacts from energy market volatility to seep into labor demand if the effects of the Iran conflict linger through the summer.
Bottom Line: Most indicators are rangebound as the labor market holds steady. If we stay in this low-hire, low-fire environment, we should expect unemployment to be range bound. However, if we see a slowdown in sales and business activity like we expect next quarter, we should expect unemployment to tick upward.

Beige Book Gives Mixed Signals. The May 2026 installment, one of eight Federal Reserve Beige Book editions scheduled for this year, is becoming increasingly valuable as central bankers struggle to form a reasonable outlook for the economy.

Wage growth is largely in line with inflation, giving consumers the ability to keep up with price changes, at least for the time being.
Data center demand is supporting hirings. Outside that category, the broad job market remains in a low-hire, low-fire environment.
Firms are temporarily absorbing higher input costs to preserve customer demand. This occurs when businesses believe the consumer is on weaker footing.
Although delinquencies have mostly remained stable, several contacts reported early signs of deterioration.

Bottom Line: We may be at a crossroads, as credit conditions appear to be weakening. Although the economy continues to perform well, certain variables remain too fragile to withstand additional geopolitical shocks beyond what they have already endured. Business investment will likely keep the economy growing 1.8% annualized in Q2 and the upcoming jobs report will likely show firms added 50,000 to their payrolls. One growing concern is the rising unemployment rate for workers with minimal experience.

The Week Ahead

The following economic data is slated for the week ahead:

Monday: New York Fed One-Year Inflation Expectations (May)
Tuesday: NFIB Small Business Optimism (May), ADP Weekly Employment Change (May 23), Trade Balance (Apr), Existing Home Sales (May), Wholesale Inventories (Apr final), Wholesale Trade Sales (Apr)
Wednesday: MBA Mortgage Applications (June 5), Headline and Core CPI (May), Real Average Hourly Earnings (May), Federal Budget Balance (May)
Thursday: Initial Jobless Claims (Jun 6), Continuing Claims (May 30), Headline and Core PPI (May), Household Change in Net Worth (1Q)
Friday: University of Michigan Consumer Sentiment Report (June preliminary)

Important Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Asset Class Disclosures –

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

Bonds are subject to market and interest rate risk if sold prior to maturity.

Municipal bonds are subject and market and interest rate risk and potentially capital gains tax if sold prior to maturity. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor’s holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

For Public Use – Tracking: #1116034

June 5, 2026

Oil Market May Be Too Constructive on U.S.-Iran Deal

Oil Market Underestimates Frictions Beyond a Deal

Kristian Kerr | Head of Macro Strategy
Last Updated: June 04, 2026

For weeks now, media reports have been suggesting that Washington and Tehran are moving closer to a memorandum of understanding (MOU). In practical terms, that would extend the current ceasefire by roughly 60 days and create a window to negotiate a more durable peace agreement. The market’s constructive read is straightforward: an MOU should allow flows through the Strait of Hormuz to stabilize quickly, if not normalize outright very soon.

We think that interpretation is a bit too linear. Even if an MOU is signed, it does not automatically translate into an immediate surge in oil supply. The more realistic near-term path is incremental. Any early increase in barrels is likely to come from already-produced crude, including crude sitting on stranded or floating vessels and Iranian cargoes in storage, rather than a sustained restart in production or exports. In other words, this is more about clearing existing bottlenecks than reflating the supply base. At the same time, the market appears to be underestimating the logistical challenges. Tankers have been repositioned globally over the past two months, insurance premia have adjusted materially higher, and operational risk remains elevated. Getting flows back up is not as simple as flipping a switch. Shipowners and insurers will need clarity that vessels can safely transit into and out of the region before meaningfully committing capacity. With residual risks around mines, miscalculation, or a relapse in hostilities, that confidence is unlikely to be rebuilt overnight.

Bigger picture, a more meaningful and sustained recovery in supply likely requires something far more comprehensive than an interim MOU. A full agreement between the U.S. and Iran remains a high bar, with clear gaps still in place across core issues like nuclear constraints, sanctions relief architecture, and the longer-term framework governing transit through Hormuz. These are complex, interconnected issues, and even under best-case assumptions, they are unlikely to be resolved quickly. Realistically, the process could absorb much, if not all, of the proposed 60-day window, pushing us closer to peak summer driving season in the U.S. Crucially, the negotiation phase is unlikely to be smooth. The same complexity that makes a final deal so difficult to achieve also increases the risk of periodic setbacks or flare-ups along the way. Markets tend to discount outcomes; they are less efficient at pricing path dependency. Here, the path matters as any disruption will quickly affect sentiment and flows.

Cushing Inventories on Track to Reach Critical Lows Within Weeks

Source: LPL Research, U.S. Department of Energy, Bloomberg 06/03/26
Disclosure: Past performance is no guarantee of future results.

Meanwhile, the underlying physical backdrop remains tight. Inventories continue to draw at a steady clip and will only keep declining in the event of a prolonged negotiation period. Against that backdrop, the near-term risk profile for crude prices still appears skewed to the upside, in our view. For that outlook to shift in a meaningful way, we would need to see not only a near-term MOU but also clear and tangible progress toward a broader agreement that more permanently restores shipping flows closer to normal levels. At this stage, market participants appear to be getting somewhat ahead of themselves, with pricing reflecting a degree of conviction that may not yet be fully supported by actual developments.

Important Disclosures

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Asset Class Disclosures –

Bonds are subject to market and interest rate risk if sold prior to maturity.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor’s holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

For Public Use – Tracking: #1119572

June 4, 2026

May Flows: Equities Dominate

Equity Record Highs Shape May Fund Flows

Jeff Buchbinder | Chief Equity Strategist
Last Updated: June 03, 2026

Additional content provided by Kent Cullinane, Sr. Analyst, Research.

With May behind us, we conducted a deep dive into exchange-traded fund (ETF) flows over the month and year-to-date (YTD) periods. Flows measure the net movement of cash into and out of investment vehicles, such as mutual funds and ETFs. We analyzed flows to gain insight on investor demand and sentiment surrounding asset classes, sectors, and other segments of markets.

Broad Asset Class Flows

Global markets in May continued a broad risk-on tone, with equities closing the month at record highs on resilient growth and strong artificial intelligence (AI)-driven earnings, despite ongoing geopolitical uncertainty and persistent inflation. Bond yields moved higher as oil prices remained at multi-year highs, leading investors to scale back expectations for rate cuts by year-end — even as a new Federal Reserve (Fed) Chair was sworn in late in the month. Outside of traditional assets, capital continued to flow into private markets and AI-linked infrastructure, while commodities and currencies remained closely tied to energy dynamics, reinforcing the increasingly interconnected nature of the macro landscape.

The ETF market climbed to a record $15.7 trillion in assets in May, with both strong inflows and market performance contributing to the milestone. Equity ETFs drove the bulk of demand with $134 billion of inflows, followed by fixed income at $62 billion, and alternatives at $4.3 billion. Currency ETFs were the only asset class to experience outflows, with a net outflow of $2.5 billion, driven largely by cryptocurrency — while not a traditional fiat currency — as higher interest rates and strong equity returns reduced the relative appeal of crypto assets.

For the year-to-date (YTD) period, ETFs gathered $832 billion in assets, with roughly two-thirds of that capital flowing into equity ETFs. Equities now represent nearly 80% of total ETF market share, up marginally from 79% at the end of April. The combination of stellar performance and risk-on investor sentiment contributed to the surge in asset growth. Bonds make up another 16% of the total ETF market share, with their relative share marginally decreasing. Combined, stock and bond ETFs represent more than 95% of the ETF industry. Outside of traditional asset classes, commodities represent roughly 2.3% of remaining ETF assets or $353 billion, followed by alternatives ($138 billion), currency ($119 billion), and asset allocation strategies ($45 billion). While commodities experienced net outflows during the month, all other segments saw net inflows, and every asset class has recorded positive net inflows year to date.

Trend Intact: Equities Continue to Dominate May Flows

Trailing one-month, YTD, and one-year net asset flows across broad asset classes (AUM, Billions $)

Source: LPL Research, FactSet 05/29/26
Disclosures: Past performance is no guarantee of future results.

Asset Class Specific Flows

Equities: Within equities, U.S. large caps continued to dominate by a wide margin, attracting $77 billion — more than half of all equity inflows and nearly ten times the next-largest category. Flows into ultra-short Treasury ETFs followed distantly at $7.5 billion. Investors remained heavily tilted toward U.S. equities, supported by their relative insulation from Middle East geopolitical tensions and sustained AI-driven growth tailwinds. Other domestic segments also saw modest demand, with large cap growth and total market ETFs gathering $4.6 billion and $4.5 billion, ranking sixth and seventh, respectively. Large caps continued to outpace small caps significantly, reflecting not only their larger market footprint but also stronger performance, as the Nasdaq Composite Index (+8.4%) and S&P 500 (+5.3%) outpaced the Russell 2000 (+4.4%).

Outside of U.S. equities, global ex-U.S. total market and global semiconductor segments ranked third and fourth, respectively, in May inflows across all asset classes. Emerging market equities, ranking fifth largest by flows YTD, have been the top regional performer (relative to domestic and developed ex-U.S. equities), rising 25.6%. The rally has been driven by a shift in leadership toward technology-heavy markets, such as Taiwan and South Korea, displacing prior leaders China and India. Taiwan leads global semiconductor manufacturing, while South Korea is a key supplier of memory chips essential for AI systems — positioning both as critical pillars of the AI supply chain and supporting infrastructure.

Despite South Korea benefitting tremendously from AI tailwinds, and its equity market more than doubling so far in 2026, South Korea equity ETFs were the top segment by outflows in May, shedding $2.8 billion. The country’s equity market is effectively a concentrated AI play, with the two largest components, Samsung and SK Hynix, comprising nearly half of the index. This level of concentration has left some investors increasingly cautious, raising concerns around concentration risk, valuation sensitivity, and the sustainability of returns tied so heavily to a single theme.

Fixed Income: In fixed income, ultra-short Treasury ETFs, highlighted earlier, ranked as the second-largest segment across asset classes by inflows, drawing $7.6 billion in May. Despite the broader risk-on backdrop, these traditionally defensive, cash-like instruments still attracted significant demand. The coexistence of strong inflows into both U.S. large caps (the top segment by inflows) and ultra-short Treasuries, alongside outflows from South Korean equities (the top segment by outflows), underscores a more nuanced market dynamic, as investors balanced participation in equity upside with liquidity needs and downside protection, while also rotating away from more concentrated or fully valued risk exposures. Following ultra-short Treasuries were investment-grade bonds and global bonds, ranking fifth and eighth, respectively.

While investor sentiment remained broadly positive, no fixed income segments appeared among the top 10 categories by outflows in May. Long-duration Treasury bonds were a notable laggard, declining over the month as expectations for persistently higher inflation and interest rates weighed on longer-term return prospects. In the YTD period, long-dated Treasuries ranked as the third largest segment by outflows ($5 billion), further highlighting the risk duration may play in portfolios at the prospect of higher rates.

Diversifying Strategies: Across diversifying strategies, gold ETFs saw a meaningful outflow in May at $1.5 billion, ranking sixth among asset classes. Gold’s relative appeal dissipated as geopolitical tensions continued to ease and equities moved higher. Gold and silver, two of the largest components of the commodities markets, rank in the top five in terms of outflows YTD as investors dump these traditionally defensive, safe-haven assets for global equities. Flows into oil and gas ETFs remained relatively muted despite prices holding at multi-year highs, suggesting investors viewed these elevated energy prices as potentially the peak.

While small in size (0.9%), alternatives broadly have seen positive flows, with traditional hedge fund strategies, such as global macro, event driven, and managed futures, which are now being offered in ETF vehicles (although with stringent restrictions to stay within regulatory compliance), continue to gain assets. Collectively, these alternative strategies can be seen as defensive positions that offer uncorrelated return streams to traditional equities and fixed income.

U.S Large Cap Catapults to Top Segment by 2026 Flows

Trailing YTD net asset flows across FactSet segments (AUM, $ Billions)

Source: LPL Research, FactSet 05/29/26
Disclosures: Past performance is no guarantee of future results.

Key Tactical Asset Allocation Takeaways

When comparing the latest LPL Research Strategic and Tactical Asset Allocation Committee (STAAC) views with the May flows data, there are a number of similarities. The STAAC continues to like the top asset class by assets and largest by YTD flows, U.S. large caps. The STAAC maintains a slight overweight to large/mid cap equities, with a modest tilt towards large/mid growth, which continues to benefit from sentiment surrounding AI and strong technology-driven earnings growth. Regionally, the STAAC had been warming up to the fifth-highest segment by flows YTD, emerging market equities, on improving fundamentals and technicals, but remains neutral from a geographic perspective within foreign equities given how much the asset class has run and maintains a slight bias towards the U.S.

Within fixed income, the STAAC prefers core bond sectors over spread sectors as historically tight spreads make the relative risk-return profile of spread sectors less attractive. Outside of traditional stocks and bonds, the STAAC maintains an allocation to alternative investments, specifically in global macro and multi-strategy funds.

Important Disclosures

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Asset Class Disclosures –

Bonds are subject to market and interest rate risk if sold prior to maturity.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor’s holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

For Public Use – Tracking: #1116028

June 3, 2026

Key Takeaways from the SpaceX S-1

Counting Down to the SpaceX Launch

Thomas Shipp | Head of Equity Research
Last Updated: June 02, 2026

Additional content provided by Tucker Beale, Sr. Analyst, Research.

Interest in the IPO space has skyrocketed in the lead up to the public listing of SpaceX. And for good reason. SpaceX is looking to raise as much as $75 billion in what is expected to be the largest IPO ever, with a projected valuation range of $1.75 trillion to north of $2 trillion. Today we will cover what the company does, what it intends to do, and our key takeaways from the watershed S-1 filing.

SpaceX’s mission is to “build the systems and technologies necessary to make life multiplanetary, to understand the true nature of the universe, and to extend the light of consciousness to the stars.” Those lofty ambitions currently manifest as three businesses: Reusable rockets for space travel, Starlink for connectivity, and xAI’s Grok “truth seeking” frontier AI model (with access to the social media platform X for training data).

Along with serving their existing markets, these three business lines have the combined goal of starting to deploy orbital AI compute satellites working as data centers in space as early as 2028. By lowering the cost of transportation to orbit and leveraging expertise gained by managing the existing constellation of Starlink satellites, SpaceX looks to sidestep existing power bottlenecks restraining the AI race with a solar powered network of satellites. SpaceX management believes AI leadership will be defined by vertical integration of infrastructure and application. In other words, the ability to rapidly scale capacity to support exponential usage growth and frontier intelligence, supported by the belief that more computational resources lead to higher-quality intelligence. Management’s focus on this goal is outlined in their total addressable market (TAM) projections, which skew heavily towards AI enterprise applications powered by AI satellites and mirrors the estimated total market for knowledge work.

SpaceX’s Estimated TAM by Segment

Source: sec.gov 5/26/2026

Aiming to achieve something that has never been done on a scale never seen by leveraging technology that does not currently exist, comes with some risks. Known risks outlined by SpaceX include needing to increase launch cadence and payload capacity, which is dependent on the successful development of the newest “Starship” rocket at scale.

Other key risks include potential regulatory changes, customer concentration (~20% of 2025 revenue came from the U.S. government), integration of the newly acquired xAI business, costs associated with the development of AI capabilities, potential delays associated with development of new technologies, potential conflicts of interest between SpaceX and other entities owned by or affiliated with Elon Musk, and key person risk.

SpaceX is very much tied to the success of Elon Musk as he is the chief executive officer (CEO), chief technical officer (CTO), and chairman of the board. Musk has complete control of the company and per the S-1 filing, his “leadership, vision, and expertise are critical to the development of our technologies and the execution of our business strategy.” To incentivize execution on key initiatives, the company has granted the founder two batches of performance-based restricted shares so far in 2026. The performance milestones in the first batch of shares include the company achieving certain market capitalization levels and establishing a permanent human colony on Mars with at least one million inhabitants. The second batch has similar market cap milestones, but vest should the company create non-Earth-based data centers capable of delivering 100 terawatts of compute per year. Additionally, SpaceX does not maintain key-person life insurance on Elon Musk.

All of this adds up to a future-focused company with no shortage of opportunities and risks whose size, profitability, and ambitious timelines set it up for a potentially volatile introduction to public markets. We are intrigued by what SpaceX may accomplish in terms of extending humanity’s reach into the cosmos, but an ambitious mission on its own does not necessarily make for a sound company and there are a lot of hopes and dreams baked into the business plan. To SpaceX’s credit, many of these known risks are outlined nicely in the S-1 filing. The world needs ambitious companies pushing the boundaries of what is possible, but the ride between here and the stars may be too turbulent for some.

Disclosure: LPL Financial does not offer access to or purchase of Initial Public Offerings (IPOs)

Important Disclosures

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Asset Class Disclosures –

Bonds are subject to market and interest rate risk if sold prior to maturity.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor’s holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

For Public Use – Tracking: #1114930

June 2, 2026

Weekly Market Commentary | Why Stock Market Valuations Are Fair in Context | June 1, 2026

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Add Context, and Stock Market Valuations are Fair

We agree with the consensus view that stock valuations are elevated by traditional measures. But valuations should be considered in the context of the economic regime and earnings environment. Factoring in outlooks for economic growth, inflation, interest rates, and earnings, we are comfortable with the current 21 price-to-earnings ratio (P/E) for the S&P 500 Index. To justify a higher P/E and further moves higher from here, assumptions must be made about the path that these key drivers will take in coming months. We expect more of these factors to break positively than negatively, but it seems clear that a lot of optimism is currently being priced in. When the next bear market might arrive and where valuations will be at that time is difficult, if not impossible, to predict, but our best guess is that this bull market extends through 2027 (we define a bear market as a 20% decline on the S&P 500 based on closing prices). Gains beyond that will depend on whether the economy continues to grow, the path of interest rates and inflation, and the productivity gains (and potentially unemployment) AI brings.

Starting With the Basics: Price-to-Earnings Ratio

Before digging into what we think this stock market is worth, it’s important to recognize that valuations have not historically been good timing tools. There is essentially no correlation between valuations and where stocks will go over the subsequent year. However, P/Es have value as a basic valuation tool, especially as it pertains to predicting long-term returns. But it requires context. It’s easy to say that the S&P 500 at a forward P/E of over 21 (based on the consensus S&P 500 earnings per share estimate for the next 12 months) is high based on historical averages. But this approach importantly lacks context around where we are in the economic cycle, the levels and outlooks for inflation, interest rates, earnings, and corporate America’s capital intensity.

Perhaps the easiest one of these drivers to tackle is rates. A higher 10-year Treasury yield has historically correlated with lower P/Es, as shown in the “Higher Yields Tend to Drag Down Stock Valuations” chart. This intuitively reflects the time value of money — future earnings (or cash flows) are worth less today at higher interest rates than they would be at lower rates, and the required return threshold to justify equity risk is higher.

The Equity Risk Premium Has Effectively Been Erased

A way to capture yields and P/Es together is with the equity risk premium (ERP). This calculation compares the earnings yield from stocks (earnings / price rather than price / earnings) to the 10-year Treasury yield. As shown in the “Stock Valuations are High Relative to Bonds” chart, the ERP based on consensus earnings estimates for the next 12 months is barely positive at just 0.2%, compared to the long-term average of 2.5%. That means that investors in the S&P 500 are not expected to earn more per dollar than they would from Treasuries. Even though stock returns over the long-term have far outpaced bond returns, at current prices, theoretically those returns are expected to be closer.

Before you think about selling stocks because of valuations, keep in mind valuations are not predictive over shorter time periods. Additionally, inputs into these calculations change over time. Our expectation is that currently elevated yields will be temporary. If yields come down as oil prices normalize, equities will offer more compensation for the risk. And if recent history is a guide, earnings will be higher as well, sending earnings yields higher.

Bottom line, we expect a more positive earnings yield after the Iran conflict is resolved and the Strait of Hormuz opens to support further, albeit potentially modest, additional stock market gains.

Supportive Economic Cycle

The next key question we ask is whether economic conditions are supportive. We believe they are, particularly in terms of growth. Bolstered by fiscal stimulus from the One Big Beautiful Bill Act (OBBBA) and massive AI investment, LPL Research expects the U.S. economy to grow by 2% in 2026 (measured by real gross domestic product (GDP)), even if oil prices stay elevated for several more weeks.

In our latest Economic Navigator, LPL’s Chief Economist Dr. Jeffrey Roach explains that geopolitical conflict and commodity supply shocks might shave 0.3% to 0.4% off economic growth over the next two quarters, not nearly enough to bring recession into play. Despite these pressures, underlying demand remains firm, suggesting continued economic expansion.

Inflation is the bigger concern. We expect supply-driven shocks to push prices higher, potentially adding close to a percentage point to inflation if commodity costs stay elevated. As a result, the Federal Reserve is likely to stay on hold to assess upside inflation risks. The framework of an Iran deal that emerged last week and resulting dip in oil prices are encouraging in this regard.

As the “Inflation is an Enemy of Stock Valuations” chart illustrates, higher inflation tends to bring stock valuations down. While part of this relationship reflects higher interest rates, inflation can also slow growth and pressure profit margins if pricing power is limited. Although margins are expanding now despite high inflation, boosted by AI investment, this relationship fundamentally extends beyond rates alone.

Cash Flow Matters

We’ve focused mostly on earnings, but cash flow provides a more complete picture. Substantial capital investment can depress cash flows, but that investment can be depreciated over time, reducing the drag on earnings (which can be misleading at times). So, while earnings drive stock prices over time, assessing future cash flow prospects is more difficult, but commonly perceived as a purer, more robust valuation method.

This is where the valuation discussion gets interesting. The previously capital-light hyperscalers are now capitalintensive and massive AI investments have essentially wiped out otherwise generated cash flows. The “Hyperscaler Investment Binge Has Pressured Free Cash Flow Valuations” chart illustrates that when cash flows are depressed, the free cash flow yield (free cash flow divided by price) falls, making stocks appear more expensive and pushing the S&P 500’s current free cash flow (FCF) yield to 3.4%. This is below the post-1999 average of 5.4% (a higher FCF yield is more attractively valued), and comparable to levels observed during the dotcom peak.

However, one key difference today is that the companies making massive investments have some of the strongest balance sheets and the most cash-flow-generating ability ever achieved. If AI investments deliver as expected and capital spending eventually slows, cash flow generated down the road will be significant and could provide valuation support. While we fully acknowledge the risk of wasteful technology spending, we would argue it’s too early to say these stocks are expensive because of heavy capital investment.

Fair Value at Year End is Probably Higher Still

While equity valuations appear elevated across most traditional metrics, they are not disconnected from the broader macro and earnings backdrop. Today’s P/E multiple reflects a market pricing in continued economic resilience, eventual inflation moderation, lower interest rates, and meaningful AI productivity gains. That said, the margin for error is thin. With the ERP near zero and cash flow pressured by heavy capital spending, future gains will likely depend on policymakers effectively managing inflation and rates, and from corporations translating investment into durable earnings and cash flow growth.

Importantly, elevated valuations do not signal an imminent market reversal. Markets can sustain higher multiples longer than expected when supported by solid fundamentals, though they are also more vulnerable to shocks when optimism is fully priced in. As this cycle evolves, monitoring the trajectory of rates, inflation, and earnings will be critical. Ultimately, valuations may not dictate near-term direction but may shape opportunities and risks ahead.

Given much stronger than expected earnings growth and the continued ramp in AI spending we saw during the first quarter earnings season, it would not be a surprise to see S&P 500 earnings per share in the neighborhood of $320 or higher in 2026 and over $350 in 2027. While our estimated year-end fair value range for the index is currently under review, a 22 P/E would place index fair value potentially in the range of 7,700 to 7,800. If corporate America’s spending plans are close to what has been communicated, the calculus for at least $350 per share in earnings in 2027 seems justifiable, while AI disappointments or an extended closure of the Strait of Hormuz could challenge this view.

Overall, modestly higher stock valuations are possible but expect earnings and cash flow growth to do the heavy lifting. In our view, this stock market is fairly valued at its current forward P/E (21 to 22) and further gains through year-end will likely be driven by positive surprises on AI adoption.

Asset Allocation Insights

LPL’s Strategic and Tactical Asset Allocation Committee (STAAC) maintains its recommendation for a tactical equity overweight and fixed income underweight. This reflects an expectation of further easing of geopolitical and commodity supply concerns as a result of the U.S.-Iran conflict, alongside a more cautious outlook for select areas of core fixed income. Overall, our tactical views emphasize a modest equity overweight led by large cap growth, a continued focus on quality bond sectors, caution in rate-sensitive fixed income sectors, and an ongoing allocation to diversifying strategies and alternatives.

Within equity sectors, the Committee remains overweight technology, supported by the sector’s strong and accelerating earnings outlook and abating AI investment skepticism. At the same time, given the magnitude of recent gains in semiconductor stocks, some consolidation of those gains is anticipated. The STAAC also maintains an overweight stance towards industrials on strong earnings momentum, favorable technicals, and continued tailwinds from fiscal spending and AI investment. On the other hand, the Committee remains underweight consumer discretionary and real estate on sub-par technicals and uncompelling valuations.

Important Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

All investing involves risk, including possible loss of principal.

US Treasuries may be considered “safe haven” investments but do carry some degree of risk including interest rate, credit, and market risk. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.

The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The PE ratio (price-to-earnings ratio) is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. It is a financial ratio used for valuation: a higher PE ratio means that investors are paying more for each unit of net income, so the stock is more expensive compared to one with lower PE ratio.

Earnings per share (EPS) is the portion of a company’s profit allocated to each outstanding share of common stock. EPS serves as an indicator of a company’s profitability. Earnings per share is generally considered to be the single most important variable in determining a share’s price. It is also a major component used to calculate the price-to-earnings valuation ratio.

All index data from FactSet or Bloomberg. All index data from FactSet or Bloomberg.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Guaranteed | Not Bank/Credit Union Deposits or Obligations| May Lose Value

For public use.
Member FINRA/SIPC.
Tracking #1117066 | #1117067 (Exp. 06/27)

June 1, 2026

Weekly Market Performance | May 29, 2026

LPL Research
Last Updated: May 29, 2026

LPL Research provides its Weekly Market Performance for the week of May 25, 2026. U.S. stocks extended their recent momentum during the holiday‑shortened week with the S&P 500 notching fresh record highs and a ninth consecutive weekly gain. Investor sentiment remained anchored in optimism around the artificial intelligence (AI) theme and a potential truce between the U.S. and Iran, while falling oil prices and weaker bond yields were also supportive. Europe and Asia also broadly found traction on the same dynamics, amid local headlines. Meanwhile, commodities broadly declined as crude fell sharply with a U.S.-Iran agreement seemingly in the works, while gold moved higher.

Stock Index Performance

Index	Week-Ending	One Month	Year to Date
S&P 500	1.46%	6.26%	10.77%
Dow Jones Industrial	0.75%	4.30%	6.03%
Nasdaq Composite	2.21%	9.13%	15.85%
Russell 2000	1.62%	6.44%	17.48%
MSCI EAFE	0.90%	4.99%	9.25%
MSCI EM	4.20%	9.51%	25.48%

S&P 500 Index Sectors

Sector	Week-Ending	One Month	Year to Date
Materials	1.41%	0.40%	11.46%
Utilities	-2.28%	-3.30%	3.46%
Industrials	0.72%	1.69%	11.37%
Consumer Staples	-2.95%	-1.36%	6.86%
Real Estate	-1.53%	0.41%	9.23%
Health Care	-0.34%	4.50%	-3.72%
Financials	-0.61%	-0.69%	-5.94%
Consumer Discretionary	1.50%	3.83%	3.86%
Information Technology	4.28%	14.87%	23.20%
Communication Services	0.00%	3.05%	9.04%
Energy	-5.26%	-5.14%	24.61%

Fixed Income and Commodities

Indexes and Commodities	Week-Ending	One Month	Year to Date
Bloomberg U.S. Aggregate	0.73%	0.32%	0.27%
Bloomberg Credit	0.82%	0.71%	0.53%
Bloomberg Munis	0.80%	0.14%	1.11%
Bloomberg High Yield	0.43%	0.50%	1.56%
Oil	-9.06%	-17.81%	53.00%
Natural Gas	13.28%	24.40%	-10.66%
Gold	1.02%	0.16%	5.46%
Silver	0.03%	5.99%	5.44%

Source: LPL Research, Bloomberg 5/29/26 @2:57 p.m. ET
Disclosures: Indexes are unmanaged and cannot be invested in directly.

U.S. and International Equities

U.S. Equities: An abbreviated trading week didn’t slow stocks down in extending their recent record-breaking run for another week. The S&P 500 posted multiple record highs over the last four days en route to a ninth straight weekly gain, and back-to-back monthly gains, as all roads continued to lead back to AI and the Strait of Hormuz. Following the Memorial Day holiday, a quick bout of strikes in the Middle East were brushed off by markets and chalked up to be an “escalate-to-deescalate” tactic, leaving peace deal optimism front and center to power gains. Also, as a result of an expected deal between Washington and Tehran, easing crude prices and reprieve for Treasury yields were flagged as supportive for equities, in addition to cooler-than-expected inflation data.

Elsewhere, tech names faced some fairly choppy trading but persevered to gain ground on the week. The AI optimism narrative remained fully intact; however, the momentum trades that have powered the space higher in recent months showed some signs of taking a breather Wednesday before quickly bouncing back in the following session. A market cap milestone for South Korean chipmaker SK Hynix also lifted enthusiasm, while on the earnings front, shares of computer-maker Dell (DELL) spiked on a much stronger-than-expected sales outlook fueled by demand for AI servers.

International Equities: Across the pond, European stocks managed to cling to a weekly advance on the back of Friday’s gain after reversing week-to-date gains just one day prior. Contributing to the late-week volatility was a brief bounce in energy prices and a warning from European Central Bank (ECB) Chief Economist Philip Lane around persistent war-driven inflation impacts. Nonetheless, a drop in oil prices over the course of the week broadly boosted risk appetite for the energy-sensitive region, with cooler-than-expected inflation data for Germany, France, and Spain helping seal gains to close the week.

Major Asian exchanges ended mostly higher, with tech-heavy markets driving regional gains. South Korea’s KOSPI extended its string of outperformance with an 8% rally, surpassing the 8,000-point mark on the back of semiconductor shares as chipmaker SK Hynix breached the $1 trillion market cap landmark. Taiwan also gained ground on tech strength, while greater China ended mixed after fairly choppy trading. Chinese companies were supported by expectations that tighter capital controls may boost equity flows, housing market reform plans, and enthusiasm around chipmaker Huawei’s plans for innovative improvements. But the upside was countered by effects of the cross-border brokerage crackdown beginning to be felt and e-commerce shares in Hong Kong facing pressure amid intensifying competition. Japan also delivered strong gains on tech shares and U.S.-Iran peace deal hopes.

Fixed Income, Currency, and Commodity Markets

Fixed Income: Core bonds, as measured by the Bloomberg Aggregate Index, traded higher over the holiday-shortened week, paring back losses since the start of the Iran conflict that have pushed the 10-year Treasury yield higher by roughly 50 basis points (0.50%) and the 2-year yield higher by around 60 basis points (0.60%). The move higher is a combination of rising inflation expectations, higher term premia, and a repricing higher in monetary policy rate expectations. Currently, markets are pricing in roughly a 60% chance of a rate hike this year, with a full hike priced by April 2027 — a dramatic reversal from the rate-cut narrative that dominated early 2026. As well, the market’s implied neutral fed funds rate has been marked up near 4%, suggesting investors no longer believe this cycle ends at 2.5–3.0%, with market pricing closer to central bank hawks than even median expectations.

Importantly, long-run inflation expectations remain anchored. Market-implied breakevens have not broken out in a way that signals a loss of Federal Reserve (Fed) credibility, which is a key reason we believe the Fed can remain on hold rather than be forced to hike rates. Unlike in 2022, when the Fed was clearly behind the curve and chasing rising inflation expectations, markets now appear to be looking through near-term price pressures. That said, macro data has generally come in better than expected, and this week’s $183 billion in Treasury sales — while not strong — were not particularly weak either, suggesting investors are generally comfortable with current yield levels.

Bottom Line: The market has priced in a rate hike, reset the neutral rate, and is demanding a meaningful term premium, all without inflation expectations coming unanchored or the data rolling over. In our view, a lot of the bad news is already priced into the Treasury market, and we think the bar for a hike is much higher than what markets are currently implying.

Commodities and Currencies: The broader commodity complex declined this week. To no one’s surprise, crude oil prices remained in the spotlight, with West Texas Intermediate (WTI) trading over 10% into the red with a peace deal between Washington and Tehran seemingly in the making. While tighter global supplies from a historic supply shock will linger, worries of tighter supply for longer began to be priced out of futures curves. Hopes of the Strait of Hormuz re-opening soon places WTI on pace for a meaningful monthly decline of over 10%. Elsewhere, gold prices moved higher as expectations of a Fed rate hike ebbed slightly on hopes of a U.S.-Iran truce, continuing to behave somewhat contrary to its safe haven status by moving in the opposite direction of oil. Nonetheless, the yellow metal remained on track for a monthly loss, while silver prices steadied this week to remain on pace for a gain in May. In currencies, the U.S. dollar paced a monthly rise despite weakening over the last five days as the euro and British pound strengthened.

Economic Weekly Roundup

Highlights from the April Personal Income and Spending Report:

First quarter (Q1) economic growth was revised down to 1.6% annualized from 2.0% as services spending rose less than originally estimated, but nondurable and durable goods spending was revised higher. Business investment in equipment and further spending in intellectual property is driving this economy and will continue to do so.
Shipments of non-defense capital goods ex aircraft in April rose 0.4% after rising 1.3% in March. The race to build out AI-related infrastructure will likely continue throughout this year, supporting growth.
The number of individuals applying for unemployment insurance benefits last week remained low, indicating the labor market is stable despite a falling hiring rate.
Core inflation rose 0.2%, but we expect an acceleration next month as more inflation pressures seep into durable goods prices.

Bottom Line: Despite the downward revision to Q1 growth, we expect business spending will keep contributing to growth in the near term. Regarding the inflationary environment, supply constraints will cause inflation pressures to seep into both nondurable and durable goods most likely for the next few months. Core services ex housing inflation rose a mere 0.1%. But beware of the modest rise in those “supercore” metrics in April because of the one-off decline in financial services fees.

The Week Ahead

The following economic data is slated for the week ahead:

Monday: S&P Global U.S. Manufacturing PMI (May final), ISM Manufacturing Index (May), Construction Spending (Apr)
Tuesday: JOLTS Jobs Opening (Apr), Wards Total Vehicle Sales (May)
Wednesday: MBA Mortgage Applications (May 29), ADP Employment Change (May), S&P Global U.S. Services and Composite PMIs (May final), Factory Orders (Apr), ISM Services Index (May), Durable Goods Orders (April final), Capital Goods Orders and Shipments (April final), Fed Beige Book release
Thursday: Challenger Job Cuts (May), Nonfarm Productivity (1Q final), Unit Labor Costs (1Q final), Initial Jobless Claims (May 30), Continuing Claims (May 23)
Friday: Change in Nonfarm, Private, and Manufacturing Payrolls (May), Average Hourly Earnings (May), Average Weekly Hours All Employees (May), Unemployment Rate (May), Labor Force Participation Rate (May), Underemployment Rate (May), Consumer Credit (Apr)

Important Disclosures

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Asset Class Disclosures –

Bonds are subject to market and interest rate risk if sold prior to maturity.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor’s holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

For Public Use – Tracking: #1117155

June 1, 2026

Assessing the Sustainability of the Record-High Rally

Technical Take on the Record-High Rally

Adam Turnquist | Chief Technical Strategist
Last Updated: May 28, 2026

Risk appetite remains firmly intact as optimism surrounding a potential resolution to the war with Iran continues to improve investor sentiment. The S&P 500 has now advanced for eight consecutive weeks, with price action remaining remarkably resilient throughout the recovery. Since bottoming on March 30, the index has gained roughly 18% over just 39 trading sessions, producing an average daily gain of more than 0.8% while experiencing a maximum drawdown of only 1.2% during the advance. While easing geopolitical tensions and an ongoing ceasefire framework have provided a major catalyst for the rally, strong corporate earnings have also played a critical role in sustaining momentum.

According to LPL Chief Equity Strategist Jeffrey Buchbinder, first-quarter S&P 500 earnings growth is currently tracking near 28% year over year. The Magnificent Seven accounted for more than 15 percentage points of that growth, though the remaining “S&P 493” are still expected to deliver earnings growth near 20%, highlighting that underlying fundamentals outside of mega cap technology remain healthy.

From a technical perspective, the S&P 500 regained momentum quickly after gapping above its 200-day moving average (dma) in April and has since moved decisively to new record highs above the 7,000-point milestone. Momentum indicators continue to confirm the bullish trend, although several measures are now approaching short-term overbought territory following the magnitude and speed of the advance.

Market breadth, however, remains a more cautious part of the recovery story. Breadth indicators have diverged from price action over the last month, suggesting participation beneath the surface has not fully kept pace with the index-level rally. Currently, only about 60% of S&P 500 constituents are trading above their 200-dma, below the historical average of roughly 73% typically seen when the index is making new highs. Still, narrow breadth has not prevented this large cap-led bull market from extending higher, as periods of concentrated leadership have often been followed by broader sector and style rotations once mega cap momentum begins to cool.

A similar pattern unfolded last year when large cap technology stocks led the market sharply higher off the April lows before eventually consolidating as leadership broadened into value stocks, small caps, and other cyclical areas of the market last fall. The current environment appears to be following a comparable script, with mega cap technology and semiconductor-related names once again carrying much of the market through major resistance levels.

Technology leadership remains exceptionally strong, with the sector continuing to reach new highs on both an absolute and relative basis. However, increasingly stretched momentum conditions and elevated positioning suggest the rally may be becoming more vulnerable to short-term consolidation. Semiconductor and memory-related stocks have experienced parabolic advances since the March lows, with several momentum indicators reaching historically elevated levels. While overbought conditions alone are not necessarily bearish, the probability of near-term profit taking or rotational activity appears to be rising as investor positioning becomes increasingly crowded.

Records on Repeat for the Broader Market

Source: LPL Research, Bloomberg 05/27/26
Disclosures: Past performance is no guarantee of future results. All indexes are unmanaged and cannot be invested in directly.

Internal Outperformance

Another way to assess participation is to analyze how many stocks are outperforming the broader index. As the rotation from last fall gained traction into 2026, just over two-thirds of S&P 500 constituents were outperforming the index on the year in mid-February. Historically, that level has represented the upper end of participation breadth over the last two decades in our dataset.

Since then, leadership has rotated back toward growth and big tech, driving the percentage of stocks outperforming the index down to roughly 33% earlier this month. That level is approaching a historically narrow participation extreme, which has often preceded broader market rotations. In fact, following the previous seven instances where internal outperformance reached similarly depressed levels, large cap value and small cap stocks outperformed both large cap growth and the broader S&P 500 over the subsequent one-, three-, and six-month periods.

Historically Narrow Leadership May Be Setting the Stage for Rotation

Source: LPL Research, FactSet 05/26/26
Disclosures: Past performance is no guarantee of future results. All indexes are unmanaged and cannot be invested in directly.

Conclusion

The S&P 500 continues to exhibit strong momentum, supported by growing optimism surrounding a resolution to the conflict with Iran and the eventual reopening of the Strait of Hormuz. Corporate earnings have provided another important tailwind, particularly within large cap technology, where strong results continue to reinforce the longer-term artificial intelligence growth narrative. At the same time, increasingly stretched momentum conditions are beginning to emerge following the market’s largely one-way advance, especially across semiconductor and memory-related stocks that have experienced parabolic moves higher in recent months.

Investor sentiment and positioning within the technology space have also become increasingly crowded from a contrarian perspective, leaving us somewhat cautious over the near term as the probability of consolidation or a pullback appears elevated. Longer term, we remain constructive on the secular bull market backdrop but recognize market advances rarely unfold in such a linear fashion. In addition, historically low levels of internal outperformance continue to suggest the potential for a broader rotation away from concentrated large cap growth leadership and into other areas of the market.

Important Disclosures

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Asset Class Disclosures –

Bonds are subject to market and interest rate risk if sold prior to maturity.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor’s holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

For Public Use – Tracking: #1115500

May 28, 2026

AI Capex Boom Fuels Corporate Bond Supply and Duration Risks

AI’s New Frontier: The Transformation of Investment-Grade Credit

May 26, 2026 | Lawrence Gillum

The artificial intelligence (AI) boom has transitioned from an equity market narrative to a defining force in fixed income. Hyperscalers (Amazon (AMZN), Alphabet (GOOG/L), Meta (META), Microsoft (MSFT), and Oracle (ORCL)) are shifting from internal cash flows to substantial bond issuance to fund massive data center, graphics processing unit (GPU), and power infrastructure buildouts. This marks a structural change in investment-grade (IG) credit supply, with important implications for duration, spreads, sector composition, and portfolio construction.

In 2025, the five major hyperscalers issued approximately $121 billion in U.S. corporate bonds, more than four times their 2020–2024 annual average of $28 billion. Early 2026 data show continued momentum, with projections for hyperscaler net supply rising 30–50% to $130–150 billion. Overall U.S. IG gross issuance is forecast to hit record levels between $1.8 trillion and $2.25 trillion, with AI-related deals representing a material share. Tech’s weighting in major IG benchmarks has already increased and now accounts for around 10% of the Bloomberg Corporate Bond Index, which is up from 9% in 2024.

This issuance is notably long dated, reflecting the multi-decade useful life of data centers and associated infrastructure. Wall Street estimates center on $300 billion in AI-related IG supply for 2026, potentially delivering $360 billion in 10-year duration equivalents. The result is incremental duration added to portfolios at a time when many investors already grapple with term premium dynamics and a potentially steepening yield curve.

From a credit perspective, the story remains fundamentally constructive. Hyperscalers maintain solid balance sheets, with post-issuance leverage often in the 0.4–0.7x range versus the IG average of near 3x. New-issue concessions have averaged around 12 basis points — wider than the broader market’s ~2.5 basis points — yet deals remain heavily oversubscribed, often 4x or more (meaning for every $1 of debt issuance, there has been $4 of demand). However, despite steady demand, credit spreads (the additional compensation above Treasury securities) have widened for the tech sector relative to the broader IG corporate bond index on issuance concerns. After largely trading in concert with the index, the tech sector has underperformed lately right as issuance started to pick up.

Tech Spreads Have Widened Relative to the Index on Issuance Concerns

Source: LPL Research, Bloomberg 05/26/26
Disclosures: All indexes are unmanaged and cannot be invested in directly. Past performance is no guarantee of future results.

That said, technical pressures are evident. Surging supply amid tight spreads risks modest widening, particularly if merger and acquisition (M&A) activity rebounds or refinancing waves coincide. Concentration risk is rising — the broader tech sector could exceed 12% of benchmarks (currently 10%), introducing greater equity-like correlation during periods of AI hype cycles or regulatory scrutiny.

The AI debt wave underscores a broader truth: innovation-driven capital expenditures (capex) are no longer confined to equity balance sheets. It is actively reshaping the IG universe, creating both challenges and compelling opportunities for those equipped to navigate the dispersion. While tech sector concentration within the broader corporate bond market will likely continue to rise, it is important to note that corporate bonds still represent only 24% of the Bloomberg Aggregate Bond Index. As such, tech concentration risk remains relatively modest within the broader fixed income market (less than 2.5%). And, with spreads still at historically low levels and total yields above long-term averages, the current environment favors income-oriented investors who can largely buy and hold bonds while harvesting coupon payments.

Important Disclosures

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Asset Class Disclosures –

Bonds are subject to market and interest rate risk if sold prior to maturity.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor’s holdings.

This research material has been prepared by LPL Financial LLC.

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value

For Public Use – Tracking: #1114528

May 26, 2026

Blog

What’s Trending in Managed Futures

Strategy Background

Current Positioning

LPL Research Takeaway

Important Disclosures

Recent Yield Movements Amid Geopolitical Tensions

To Hike, or Not to Hike, That is the Question

Markets Have Priced in a Full Fed Rate Hike by December 2026

The Fed Can Be Patient…For Now

Unlike in 2022, Inflation Expectations Remain Well Anchored

Higher Yields: A Mix of Inflation and Real Growth Expectations

10-Year Nominal Yield Broken Out by Inflation and Growth Drivers

Resilient Data, Steady Demand

Economic Data Has Been Better Than Expected Recently

Conclusion

Asset Allocation Insights

Stock Index Performance

S&P 500 Index Sectors

Fixed Income and Commodities

U.S. and International Equities

Fixed Income, Currency, and Commodity Markets

Economic Weekly Roundup

The Week Ahead

Important Disclosures

Oil Market Underestimates Frictions Beyond a Deal

Cushing Inventories on Track to Reach Critical Lows Within Weeks

Important Disclosures

Equity Record Highs Shape May Fund Flows

Broad Asset Class Flows

Trend Intact: Equities Continue to Dominate May Flows

Asset Class Specific Flows

U.S Large Cap Catapults to Top Segment by 2026 Flows

Key Tactical Asset Allocation Takeaways

Important Disclosures

Counting Down to the SpaceX Launch

SpaceX’s Estimated TAM by Segment

Important Disclosures

Add Context, and Stock Market Valuations are Fair

Stock Index Performance

S&P 500 Index Sectors

Fixed Income and Commodities

U.S. and International Equities

Fixed Income, Currency, and Commodity Markets

Economic Weekly Roundup

The Week Ahead

Important Disclosures

Technical Take on the Record-High Rally

Records on Repeat for the Broader Market

Internal Outperformance

Historically Narrow Leadership May Be Setting the Stage for Rotation

Conclusion

Important Disclosures

AI’s New Frontier: The Transformation of Investment-Grade Credit

Tech Spreads Have Widened Relative to the Index on Issuance Concerns

Important Disclosures