Q3 2026

Capital Markets Outlook

June 2026

Highlights

Macro

Can companies deliver on such high earnings expectations?
The inflationary impact of the Strait of Hormuz closure appears contained.

Rates

Rates have risen globally, as have expectations for central banks to hike.

Credit

Hyperscaler issuance Is coming at a blistering place.

Emerging-Market Debt (EMD)

We continue to see opportunity in certain local emerging markets.

Equity

Tech stocks surged; growth rebounded in 2Q, but value stocks led YTD.

Macro
Rates
Credit
EMD
Equity

Macro

Can companies deliver on such high earnings expectations?

The Sequence of Returns During the First Half of 2025 and the First Half of 2026 Look Remarkably Similar

S&P 500 performance (normalized)

As of 30 June 2026
Source: Bloomberg, FactSet and AB

However, the Driver Behind Each Rally Was Remarkably Different

S&P 500 change in earnings expectations (normalized)

As of 30 June 2026
Source: Bloomberg, FactSet and AB

Current analysis does not guarantee future results.

Rates

Rates Have Risen Globally, as Have Expectations for Central Banks to Hike

Yields on 10-Year Government Bonds in Many Major Economies Have Increased in 2026

Yield (percent)

As of 30 June 2026
Source: Bloomberg and AB

Markets Now Expect Hikes Across Many Major Central Banks

Market-expected number of hikes (cuts)

As of 30 June 2026
Source: Bloomberg and AB

Current analysis does not guarantee future results.

Credit

Hyperscaler Issuance Is Coming at a Blistering Pace

Hyperscaler Issuance Is on Pace for Nearly $400 Bil. for the Full Year of 2026

Investment grade debt issuance

As of June 30, 2026
Source: Bloomberg, J.P. Morgan and AB

These Hyperscalers Have Begun to Trade Wide to Non-Hyperscalers

Spread

As of June 30, 2026
Source: Bloomberg, J.P. Morgan and AB

Major Hyperscalers (ex Oracle) Have Low Leverage

Net debt/EBITDA

As of June 30, 2026
Source: Bloomberg, J.P. Morgan and AB

Current analysis and forecasts do not guarantee future results. References to specific securities discussed are not to be considered recommendations by AllianceBernstein L.P. Logos, brands and other trademarks in this presentation are the property of their respective trademark holders. They are used for illustrative purposes only and are not intended to convey any endorsement or sponsorship by, or association or affiliation with, the trademark holders.
US Investment Grade based on Bloomberg US Corporate Bond Index. Hyperscalers defined as GOOGL, META, MSFT, AMZN, SPCX, and ORCL. Non-hyperscalers defined as other non-financial issues in 10-year bucket defined as bonds maturity in 7–12 years. 30-year bucket defined as bonds maturity in 27–33 years.

EMD

Emerging Market Corporate Fundamentals Remain Attractive

Fundamentals Remain Strong in EM Corporates

Net leverage

As of June 30, 2026
Source: Bloomberg, J.P. Morgan and AB

EM Corporates Continue to Offer Strong Risk-Adjusted Returns

Sharpe ratios (2015–2026)

As of June 30, 2026
Source: Bloomberg, J.P. Morgan and AB

Past performance and current analysis do not guarantee future results.
EM: emerging-market; IG: investment-grade; HY: high-yield; Sov.: sovereigns; Agg.: aggregate. Right display: EM HY corporates represented by J.P. Morgan CEMBI Broad Diversified-HY; US high yield by Bloomberg US High Yield; EM corporates by J.P. Morgan CEMBI Broad Diversified; European high yield by Bloomberg Pan Euro High Yield; EM IG corporates by J.P. Morgan CEMBI Broad Diversified-IG; EM sovereigns by J.P. Morgan EMBI Global Diversified; US investment-grade corporates by Bloomberg US Corporate Investment Grade; global aggregate by Bloomberg Global Aggregate; US aggregate by Bloomberg US Aggregate; and Euro IG by Bloomberg Pan European Aggregate Corporate.

Equity

Global Stocks Recovered on Middle East Ceasefire, AI Confidence

MSCI ACWI

January 2026–June 2026

As of June 30, 2026.
Source: FactSet, FTSE Russell, MSCI, S&P and AB

Regional Returns

April 2026–June 2026 (USD, percent)*

As of June 30, 2026.
Source: FactSet, FTSE Russell, MSCI, S&P and AB

Past performance does not guarantee future results.
IPO: initial public offering
*Emerging markets represented by MSCI Emerging Markets Index, US small-caps represented by Russell 2000 Index, China represented by MSCI China A Index, US large-caps represented by S&P 500, Japan represented by MSCI Japan, Europe ex-UK represented by MSCI Europe ex-UK Index, Australia represented by MSCI Australia Index and UK represented by MSCI United Kingdom Index.