YTD returns across major U.S. asset classes continue to reflect a highly concentrated market. The Finviz chart below does a nice job illustrating YTD returns across a wide array of futures contracts. Large-caps dominate YTD equity returns, while small- and mid-cap stocks lag amid tighter financial conditions and slower earnings growth.
Outside of equities, YTD returns have been more muted. Bonds have stabilized as yields eased from their highs, offering modest diversification benefits, while cash remains competitive thanks to elevated short-term rates. Commodities and real assets have delivered mixed YTD returns as global growth slows and inflation pressures fade.
The takeaway is clear: YTD returns viewed at a high level mask wide dispersion beneath the surface, making positioning and diversification far more critical than broad market exposure.
Fed Minutes Point to a Slower Path for Rate Cuts
from the Fed’s December meeting show policymakers growing more cautious about further in early 2026. Several officials noted that the decision to ease in December was “finely balanced,” with some preferring to hold rates steady as inflation progress shows signs of stalling.
While labor market conditions have softened, economic growth and consumer spending remain resilient, complicating the policy outlook. As a result, many participants favored keeping rates unchanged for “some time” while assessing incoming data. That stance aligns with the Fed’s projections, which point to a slower and more data-dependent path for future cuts.
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