Weekly investment commentary en us 20260810 two market signals one story

CAPITAL AT RISK. INVESTMENTS CAN RISE OR FALL IN VALUE. FOR PUBLIC DISTRIBUTION IN THE U.S., CANADA, LATIN AMERICA, ​ SELECT COUNTRIES IN EUROPE (SEE THE FULL DISCLAIMER), ISRAEL, SOUTH AFRICA, HONG KONG, SINGAPORE AND AUSTRALIA. ​ FOR INSTITUTIONAL, PROFESSIONAL, AND QUALIFIED INVESTORS AND CLIENTS IN OTHER PERMITTED COUNTRIES.

Weekly commentary August 10, 2026

Two market signals, one story • Strong corporate earnings and rising government bond yields tell the same Wei Li story: a structurally higher cost of capital calls for a different portfolio approach. Global Chief Investment Strategist – BlackRock • U.S. Treasury yields fell as weak jobs data eased pressure for an immediate Fed Investment Institute rate rise. But a steeper yield curve suggests long-term inflation risks remain.

• July inflation data will show whether softer hiring and wages are feeding Vivek Paul through to prices. We expect some inflation rebound from June’s softer reading. Global Head of Portfolio Analysts are raising corporate earnings forecasts even as long-term government Research – BlackRock Investment Institute bond yields rise. These are not contradictory signals. We think both are consistent with the structural changes reshaping markets. That’s why our capital market assumptions (for professional investors only) are built around multiple scenarios Devan Nathwani with different macro outcomes. That framework underpins our preference for Portfolio Strategist – equities and underweight to developed market government bonds. BlackRock Investment Institute Breaking the cycle S&P 500 earnings growth estimate paths, 2021-2027 Vidy Vairavamurthy 30% Chief Investment Officer, Alternative Portfolio 25% Solutions – BlackRock 2026

-5% Source: BlackRock Investment Institute with data from LSEG Datastream, August 7, 2026. Lines show the evolution of calendar year earnings estimates over time for the S&P 500 index. Visit BlackRock Investment Institute for insights on the Rapidly rising earnings forecasts and higher government bond yields might seem global economy, markets hard to reconcile. Both trends can pull markets in opposing directions, as higher and geopolitics. long-term rates tend to dampen earnings growth. Yet five years after the last economic downturn, consensus earnings forecasts for 2026 are still being revised higher, not lower. See the chart. We see this as evidence of structural forces at play. In our CMAs, we see strong earnings growth as durable. We expect U.S. corporate earnings to grow by 11.6% a year over the next five years — a pace seen in only about 15% of historical five-year periods. This outcome is not guaranteed and is conditional on AI adoption boosting productivity and profit margins. But the fact that it is plausible underscores why we cannot apply a typical business cycle playbook to long-term portfolios in this environment.

FOR PUBLIC DISTRIBUTION IN THE U.S.,CAPITAL CANADA,ATLATIN RISK. AMERICA, AUSTRIA, INVESTMENTS CANGERMANY, FRANCE, RISE OR FALL ITALY, IN VALUE. LIECHTENSTEIN, FOR IRELAND,INSPAIN, PUBLIC DISTRIBUTION PORTUGUAL, THE U.S., BELGIUM, CANADA, LATIN UK, LUXEMBOURG, AMERICA, ​ SWITZERLAND, NETHERLANDS, NORWAY, SELECT FINLAND, COUNTRIES SWEDEN,(SEE IN EUROPE DENMARK, ISRAEL, THE FULL SOUTH AFRICA, DISCLAIMER), ISRAEL,HONG SOUTHKONG, SINGAPORE AFRICA, AND AUSTRALIA. HONG KONG, SINGAPOREFORANDINSTITUTIONAL, AUSTRALIA. ​ FORPROFESSIONAL, INSTITUTIONAL,QUALIFIED INVESTORS PROFESSIONAL, AND AND QUALIFIED QUALIFIED CLIENTS INVESTORS IN OTHER AND PERMITTED CLIENTS IN COUNTRIES.COUNTRIES. OTHER PERMITTED

The same forces supporting corporate earnings are also driving the global bond reset that has lifted government bond yields since 2021. That aligns with our long-held view of a world shaped by supply scarcity, where investors demand more compensation for holding long-term government debt. Rising public borrowing, greater inflation uncertainty and more volatile bond markets have reinforced that trend. Yet we remain strategically underweight developed market government bonds. This is an active call because we think long-term yields have more room to run. Governments, AI hyperscalers and companies across the economy are…