Q2 2026 Short Duration Commentary

Q2 2026 was shaped by improving inflation trends, evolving Federal Reserve policy and continued strength in business investment. Despite geopolitical uncertainty and uneven economic growth, markets remained resilient, supported by spending on AI and infrastructure and a more constructive outlook for investors.

Key Takeaways

• Inflation improved, helping support market sentiment despite ongoing geopolitical uncertainty.
• AI and infrastructure investment remained strong, offsetting softer areas of the economy and supporting growth.
• The first FOMC meeting led by Chair Kevin Warsh reinforced the Fed's focus on inflation, prompting investors to reassess interest rate expectations.