The first half of 2024 revealed a stark contrast between strong equity gains and underwhelming fixed income performance. Driven by the continued rise of the Magnificent 7 stocks and AI innovation, equities outperformed expectations. Meanwhile, bonds struggled—though we remain optimistic for a rebound as Fed rate cuts begin to take shape in the second half of the year.
With inflation cooling, a resilient job market, and recession fears fading, economic fundamentals continue to support both asset classes. While rate cuts may be fewer than originally forecasted, they’re expected to benefit both stocks and bonds moving forward. Additionally, historical election year trends and the strong performance of markets near all-time highs offer further encouragement for long-term investors.