Asset Allocation

In a world defined by rampant energy demand and electrification, battery tech is one of the more intriguing places to invest. While attention has turned to the big AI narratives and debates in the market, tech categories like battery innovation have plenty of opportunities.

Inflation progress remains uneven: The latest Personal Consumption Expenditures Price Index showed some improvement after revisions, but several measures suggest price pressures remain sticky and above the Federal Reserve’s target

Seven months into the U.S.–Iran conflict, few historical analogues have held. The trajectory of oil prices has been consistent with previous geopolitical shocks, but the market response elsewhere has looked strikingly different. U.S. Treasury yields have moved notably higher, for example, while credit spreads have remained remarkably resilient.

This year has marked another remarkable chapter for the global economy and financial markets. Investors have navigated no shortage of challenges, from geopolitical conflicts and trade tensions to elevated energy prices and shifting interest rate expectations. Yet despite these headwinds, the economy continues to expand, corporate earnings remain resilient and markets have steadily climbed the proverbial wall of worry.

The latest employment report was softer on the headline numbers, but I thought the underlying details were quite constructive. Payroll growth came in below expectations and the prior two months were revised downward, yet labor-force participation increased and the workweek stabilized rather than declining as expected.

In this month’s issue, AI, energy and robotics are creating new opportunities in emerging markets, but selectivity remains key as policy, cost and execution risks evolve.

Industrials are supported by increased capital spending in electricity capacity, construction around the artificial intelligence-related (AI) infrastructure buildout, defense, and energy, although higher costs and possible delays in data center construction could temper growth.

If you only looked at the price of gold in September, you’d be forgiven for believing the bull market had run out of steam. The yellow metal fell 6.3% during the month, and some in the financial press were quick to say it had failed as a safe haven.

Societal angst about AI continues to grow. Whether it’s concern about misalignment or potentially misdirected investment, the AI-may-be-bad narrative is gaining traction. In stark contrast, the AI trade in financial markets was alive and well in September of 2026.

Our real gross domestic product (GDP) forecast for 2026 is 2.5% (based on our Global Investment Management Survey) versus the Federal Reserve’s (Fed's) forecast of 2.2% and the Wall Street consensus of around 2%.

Long viewed as an emergency brake for macroeconomic panic, gold is starting to prove itself as much more than a crisis asset.

Executives enter the earnings season with a bit of a swagger. They won't say it out loud, of course, but consider all the headwinds CEOs of companies big and small have faced in the last few years. First, it was imminent recession fears; then it was looming tariffs (followed by the shock of April 2025).

Global equities advanced in the third quarter as market returns broadened away from technology. But AI’s disruptive impact is spreading across sectors and industries—transforming the very nature of investment diversification.

September’s fixed income sell-off marked a watershed moment for muni bond markets, delivering the steepest drawdown since the 2008 Great Financial Crisis. As benchmark yields spiked, prices across muni ETFs fell in tandem, and the volatility has not let up. This week, both 10-year and 30-year Treasury yields climbed to their highest levels since 2002.

The bond market took center stage through September with inflation, oil supply chains and the Federal Reserve performing as an ensemble.

T. Rowe Price has announced the launch of the T. Rowe Price Dynamic Emerging Markets Bond ETF (TDEM) on the Nasdaq today, the company said.

Recent bond market repricing has pushed municipal yields to levels not seen in decades and improved the potential risk-reward profile for fixed income. Here, we examine why municipals stand out, how supportive credit fundamentals shape the opportunity and why investors may benefit from extending maturities to lock in attractive tax-exempt income.

The Fed’s latest 25 basis point hike might represent a recalibration rather than tightening. Instead of focusing on the next hike, investors should watch broader financial conditions and the long-term trajectory for interest rates.

Few investors would naturally put artificial intelligence data centers and US shale oil in the same frame. One is built on advanced semiconductors and software; the other on rock, steel and drilling rigs. But the economic pattern is familiar. A breakthrough changes what is possible, demand outruns supply, attractive profit pools emerge and capital floods in.

Investors who have owned securities for many years can accumulate significant unrealized gains. Selling those investments to reposition a portfolio can trigger capital gains taxes.

In September, Vanguard ETFs overall recorded a mix of steady market performance, some volatility, and significant dividend distributions, with investors pouring substantial capital into its funds.

Fixed-income investors are being paid more to take risk than they have been in years, but not all opportunities are created equal. Higher yield levels, heightened volatility and growing differences across countries, sectors, industries and issuers are expanding the opportunity set. Dispersion is the raw material from which active returns are generated. Below are four ways investors can capitalize on it.

The sell-off in U.S. Treasury (UST) yields has continued pretty much in an unabated fashion In fact, multi-year high watermarks are being achieved throughout the fixed coupon maturity curve. The most widely followed development was the UST 10-year yield rising to its highest level since 2007.

AI could be a transformative force for the Fed’s policy framework. Elevated investment demand – now coupled with positive wealth effects that are necessitating tighter financial conditions – could eventually give way to a positive supply impact from higher productivity growth that could allow for easier financial conditions without inflationary implications.

Munis can fund local power, grid, water and wastewater infrastructure; most AI campus capital will be financed in non-municipal markets.​

Explore how muni bond ETFs and targeted state funds can provide tax-efficient yields and strategic flexibility heading into 2027.

Assessing the wall of worry. Here, we assess the market's growing wall of worry, explain why these worries warrant attention, and justify our continued constructive intermediate-to-long-term stock market outlook.

Economic data from last week continued to paint a picture of a robust U.S. economy with an accelerating pace of growth. After a strong durable goods report showed business fixed investment continuing to rise on the back of ongoing AI data center buildouts, the Atlanta Fed’s GDP Now estimate for third-quarter real economic growth remained at an elevated 5 percent.

From social media and AI tools to financial professionals and workplace resources, defined contribution (DC) plan participants are drawing retirement insights from an expanding portfolio of sources, according to our latest survey. But more content doesn’t necessarily mean better outcomes. We think plan sponsors are well positioned to help participants cut through the noise.

Globalization is being reorganized around security and resilience, creating uneven risks and opportunities across markets.

It’s a complicated economic environment to retire in, with high costs and significant geopolitical and policy uncertainty. Still, people want and often may need to retire. However, thanks to innovation in the asset management world, investors have an increasing array of options.

The financial industry is being pulled between two powerful forces: bottom-up financial technology is enabling seamless integration, while top-down geoeconomic statecraft is promoting fragmentation. So much for the conventional wisdom that finance will simply become smoother, cheaper, and more globalized over time.

The bond market has become the central story for investors. The remarkable development over the past several weeks is not rising inflation expectations but rising real interest rates. Real rates have increased roughly 40 basis points in just three weeks, one of the sharpest moves I can remember over such a short period. Meanwhile, longer-term inflation expectations have actually edged slightly lower.

Bond markets continue to adjust to a more hawkish policy environment following the Federal Reserve’s recent 25-basis-point rate hike.

AI-related borrowers have accounted for nearly a quarter of nonfinancial U.S. dollar (USD) supply year-to-date, yet spreads for non-AI issuers have not widened meaningfully. Instead, hyperscaler spreads have widened, suggesting the market is absorbing the AI supply shock at its source.

Retail investors buy corporate bond ETFs expecting steady coupons and ballast against stock market volatility. Traditionally, fixed-income portfolios were anchored by defensive issuers like banks, industrials and utilities.

A recent VettaFi webcast explored advice on navigating retirees' behavioral tendencies in decumulating assets in retirement.

In his latest insight, Richard Bernstein, Global Head of Macro & Customized Investing, examines why the Fed’s actions tend to lag the economic cycle, how deglobalization may limit its flexibility, and what a potentially longer period of tighter monetary policy could mean for investors.

As bond yields have risen, mortgage rates are again facing upward pressure, extending the U.S. housing market's post-pandemic affordability challenges. Beyond mortgage rates, trends in wage growth, taxes, and insurance costs also continue to shape the affordability outlook.

Chris Galipeau discusses high-conviction insights that go beyond media headlines.

The financial markets are navigating a storm. The Treasury yield sell-off intensified this week, pushing the 10-year Treasury yield up to an intraday high of 5.20%, its highest level since 2007.

Decided to go independent? Here's how to design your RIA's client model, exit plan, technology, and compliance foundation before you file paperwork or sign a custodian agreement.

Before evaluating whether a long-short strategy belongs in a portfolio, we think it helps to understand what's actually happening under the hood. Let's start at the beginning.

The BlackRock Model Portfolio Solutions team made significant allocation shifts during the week ended September 24, 2026. The team recently managed over $300 billion and often causes shockwaves in the ETF industry.

Northern Trust Asset Management will move six mutual funds with $33 billion in assets into ETFs in early 2027, its first such conversions.

The U.S. economy remains resilient despite headwinds including sticky inflation, trade instability and rising geopolitical tensions. State and local government tax revenues have followed suit and have posted solid growth, aided by robust equity market returns.

The S&P 500 has remained remarkably resilient in the face of mounting macro headwinds. Despite oil prices topping $100 per barrel, 10-year Treasury yields climbing above 5%, and a renewed shift toward tighter monetary policy, the index continues to hover near record levels.

Artificial intelligence (AI) leadership is no longer a developed-market monopoly. Emerging markets (EM) now have their own AI champions, and productivity gains may follow. For bond investors, we expect the implications to differ by country—driven by industry composition, capital intensity, digital infrastructure and speed to adoption.

In September 2024 and June 2025, I wrote memos that were critical of governments’ attempts to override the laws of economics, based on my conviction that trying to do so is likely to prove ineffective and potentially harmful.

Asset owners want private-market exposure, but liquidity remains their biggest hurdle, an opening advisors can meet with public alternatives.

This week, there are a few things that we need to pay attention to: the large move in interest rates and what it means (and more importantly, what it doesn’t mean!); and the constant barrage of doom and gloom on energy and AI. Let’s jump in.

Creating significant wealth requires concentration of capital, attention, risk, and decision-making.

This year has presented no shortage of challenges for investors. Geopolitical conflict, trade tensions, rising energy prices, shifting interest rate expectations and an increasingly active political backdrop have each taken turns dominating the headlines. Yet despite these obstacles, the economy has continued to expand, corporate profits have marched higher and markets have climbed one wall of worry after another.

Confluence Investment Management offers various asset allocation products, which are managed based on “top down,” or macro, analysis. We publish asset allocation thoughts on a bi-weekly basis, updating the report every other Monday, along with an accompanying podcast.

The Federal Reserve hiked rates, and we expect there are more to come. With a hawkish Fed and a resilient economy, long-term yields may stay elevated.

Investment bubbles are inherently dangerous beasts. Like a natural Ponzi scheme, an investment bubble needs to draw in ever larger amounts of capital to keep it going. Nothing attracts capital like apparent success, so an inflating bubble that is creating fortunes for those who got in early will inevitably draw in capital. Unfortunately, this means the amount of money lost when the bubble bursts can outstrip the gains created on its way up.