Predictions for Second Quarter 2026

• The federal funds futures market has recently behaved as though the rise in crude oil prices will be sustained. That may not be the case. In our opinion, if tensions in the Middle East ease, oil prices could decline from current levels.
• After a difficult March, our view is that precious metals may stabilize as the year progresses. The long-term case remains intact: global debt levels are elevated, while the supply of gold and silver is limited. By contrast, central banks can expand the money supply, which continues to support demand for hard assets.
• The midterm elections in November are likely to reflect voter sentiment surrounding President Donald Trump. Given the political dynamics seen since 2016, this is not a particularly bold prediction.
• In sports, the Los Angeles Dodgers are widely viewed as the favorites to win the 2026 World Series. By contrast, the Colorado Rockies—and Oakworth’s investment committee—are not expected to contend for the title.

• There is little evidence to suggest a sharp increase in corporate hiring. At the same time, we are of the opinion that the Federal Reserve is unlikely to cut interest rates aggressively. Companies continue to adopt artificial intelligence to improve efficiency, while maintaining pressure to grow profits. As a result, the “low-hire, low-fire” economy is likely to persist in the near term.

• International equities outperformed U.S. markets in 2025, largely due to a weaker U.S. dollar and Federal Reserve rate cuts. If the Fed is less aggressive in cutting rates this year—or begins raising them—foreign markets may struggle to match that performance.
• Political uncertainty continues to complicate economic forecasting. Policy direction remains difficult to predict, which adds another layer of risk for investors.
• Since mid-2023, both the U.S. economy and equity markets have benefited from a more accommodative Federal Reserve. If monetary policy becomes less supportive in 2026, the strong market returns of recent years may be harder to sustain.
• Private credit markets could face increased volatility as investors grow more cautious. If redemptions rise, fund managers may be forced to sell assets at unfavorable prices, potentially putting additional pressure on valuations.
• Conventional thinking suggests that higher oil prices could push inflation higher and lead to rising long-term interest rates. However, the long-term correlation between crude oil prices and the 10-year U.S. Treasury note is modest. As a result, the relationship between energy prices and broader inflation may not be as direct as commonly assumed.
• Predictions of the U.S. dollar’s decline are likely to continue throughout the year. However, those making such forecasts must answer a fundamental question: What is the alternative? While the dollar may not remain dominant indefinitely, there is currently no clear replacement capable of supporting global capital flows.
• As artificial intelligence continues to evolve, policymakers are likely to pursue increased regulation. This approach may resonate with risk-averse voters and could become a prominent issue in the upcoming election cycle. While technological change can be disruptive, a lack of innovation may pose even greater long-term risks.
• Finally, the growing use of GLP-1 weight-loss medications could reshape the food industry. Companies may adjust both product offerings and marketing strategies to reflect changing consumer behavior. This could lead to reformulated products and new messaging aimed at health-conscious consumers.

SOURCES:

1. CME Group, CME FedWatch Tool, accessed March 28, 2026.
2. CLA (CliftonLarsonAllen LLP), “Looking Ahead: Will Gold and Silver Stay Shiny or Become Rusty?” Feb. 10, 2026.
3. ESPN, “Every MLB team’s odds to win the 2026 World Series: Dodgers remain favorites for repeat,” by Doug Greenberg, March 25, 2026.
4. MarketWatch, “CEOs say they won’t add many jobs in 2026. Is a low-hire, low-fire labor market the new norm?” Feb. 26, 2026.
5. BlackRock, “Investing in international equities,” accessed March 28, 2026.
6. Investopedia, “How Interest Rates Affect the Stock Market,” accessed March 28, 2026.
7. CNBC, “Private credit defaults, loan quality and debt risk raise concerns about systemic issues as AI disruption looms,” March 25, 2026.
8. Associated Press, “High oil prices knock down stocks and erase Wall Street’s hopes for a cut to interest rates,” March 20, 2026.
9. Polish Institute of International Affairs, “Alternatives to the U.S. Dollar as a Global Currency Face Brick Walls,” April 18, 2024.
10. The New York Times, “Backed by Anthropic, a Super PAC Group Begins an Ad Blitz in Support of A.I. Regulation,” Feb. 23, 2026.

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