Victory Income Investors’ 2026 Mid-Year Outlook

Integrity Monthly Commentary: June 2026

07/09/2026

Thomas Paine wrote The American Crisis series as a rallying cry for a Continental Army that was weary, hungry, cold, and had experienced few, if any, real victories –not unlike how value investors feel during this AI revolution. Okay, so maybe that’s an exaggeration. However, Paine’s point of standing by one’s country rings true for investors who still believe that valuation matters.

Fixed Income Monthly Update Commentary: June 2026

07/09/2026

May’s CPI report, published in June, reflects the persistent impacts of high oil prices and related goods on inflation. Headline CPI rose to 4.3% year over-year and Core CPI rose to 2.9% year-over-year, though oil prices began to decline in June. The Federal Reserve (the Fed) voted unanimously to leave rates unchanged at their June meeting and markets experienced their first meeting with Chair Warsh at the helm. As expected, the policy statement following the meeting was pared back from previous publications and the press conference included the announcement of multiple taskforces as Warsh seeks to reform the Fed. At the end of June expectations for future monetary policy firmed slightly with markets pricing in higher chances of a rate hike in September and some even considering a hike in July, a meaningful departure from early 2026 forecasts.

Fixed Income Monthly Update Commentary: May 2026

06/09/2026

April’s CPI report, published in May, reflects the continuing impacts of high oil prices and related goods on inflation. Headline CPI rose to 3.8% year-over-year and Core CPI rose to 2.8% year-over-year, as oil price volatility kept the energy component of the inflation measure elevated. The Federal Reserve (the Fed) did not meet in May, and the next meeting in June will be the first overseen by the new Chair, Kevin Warsh. Expectations for future monetary policy have shifted from two cuts in 2026 to potential hikes as elevated inflation persists and the labor market shows limited weakness. While investors are eager to see a deal reached for the conflict in Iran, higher energy prices may persist even once there is an agreement in place.

Integrity Monthly Commentary: May 2026

06/05/2026

With the annual Russell rebalance approaching, we turned to our lead risk analyst, Mike Wayton, for this month's Catalyst. Mike walks through the expected benchmark changes and the methodology Russell uses to determine them.

Integrity Monthly Commentary: April 2026

05/12/2026

Active management, notably in the SMID value space, continues to struggle. Only five percent of managers beat the Russell 2500TM Value Index in April. A mere three percent have outperformed since the liberation day market low. (Jefferies Manager Scorecard 5/1/2026).

Fixed Income Monthly Update Commentary: April 2026

05/06/2026

March’s CPI report, published in April, reflects the impacts of rising oil prices and closure of the Strait of Hormuz on inflation. Headline CPI rose to 3.3% year-over-year and Core CPI rose to 2.6% year-over-year, as oil price volatility put pressure on the energy component of the inflation measure. The Federal Reserve (the Fed) held rates steady, but there were four dissents at their April meeting. As the uncertain impacts of the conflict in Iran unfolded, we saw markets significantly slow expectations for rate cuts in 2026 and move to hikes in 2027. At his last press conference, Chair Powell committed to remaining on the Fed Board of Governors in an effort to protect the independence of the institution.

Integrity Monthly Commentary: March 2026

04/07/2026

Markets entered 2026 navigating an increasingly fragile private credit cycle, elevated interest rates, and concerns over AI’s impact on everything from employment to existing business models to the existence of the human race.

Fixed Income Monthly Update Commentary: March 2026

04/07/2026

February’s CPI report, published in March, looks similar at face value to January’s. However, the drivers have changed following the closure of the Strait of Hormuz and the rising cost of energy. Headline CPI remained at 2.4% year-over-year and Core CPI at 2.4% year-over-year, but energy is becoming a more volatile input. Persistently high oil prices have historically resulted in higher inflation, but the overall impacts may depend more on the length of the conflict and elevated prices. The Federal Reserve (the Fed) looked like it may still be on a strictly easing path earlier this year, but with a stable labor market and inflation elevated by tariffs and oil, this came into question in March. We explore this more in the FAQ section.

WestEnd Advisors' Mid-Quarter Macro Update Q2 2026

04/01/2026

The latest high-frequency data suggests economic growth was steady at the end of Q1 in the face of oil supply disruptions.

Integrity Monthly Commentary: February 2026

03/06/2026

According to Jefferies’ Steve DeSanctis (SMID-Cap Strategy, February 24, 2026), small caps have just ended their longest losing streak versus large caps in recorded history. Small caps had trailed large caps since the end of 2016. This 8+ year stretch is the longest on record (data back to 1926). Over that period, small caps lagged large caps by a cumulative 44%, or roughly 7% per year.

Fixed Income Monthly Update Commentary: February 2026

03/04/2026

January’s CPI report, published in February, showed a continuation of the downward trend. January CPI declined to 2.4% year-over-year, and Core CPI fell to 2.5% year-over-year. Overall prices rose less than expected in January, which reinforced market and consumer hopes that inflation will continue to trend closer to the Fed’s 2% target. The Fed may pause once more at their March meeting, however, given geopolitical developments in the Middle East and its potential impact on oil prices. As energy is an input for calculating inflation, there are some investor concerns that this could result in stickier inflation should energy prices rise and remain elevated for the duration of the conflict.

WestEnd Advisors' Mid-Quarter Macro Update Q1 2026

02/18/2026

The U.S. economy entered 2026 in what we would describe as a late-cycle expansion. While a precariously soft labor market presents risk, we also continue to monitor near-term growth drivers, such as improving credit creation, that may continue to support trend-like growth.

Integrity Monthly Commentary: January 2026

02/09/2026

Small-caps have come out of the gate strong in 2026, and we think this broadening of leadership is one of the most important developments for investors to watch. After a decade where “owning the mega-cap tech winners” was enough, the early tape in 2026 argues for revisiting diversification across size, style, and region.

Fixed Income Monthly Update Commentary: January 2026

02/05/2026

December’s CPI report, published in January prior to the Federal Reserve’s (the Fed) rate setting meeting, showed minimally changed inflation numbers from November. December CPI held at 2.7% year-over-year, and Core CPI at 2.6% year-over-year. Prices rose less than expected for December, which reinforced market and consumer hopes that inflation will continue to trend closer to the Fed’s 2% target. The Fed paused at its January meeting, which was largely expected. The drama, however, was less centered on the rate decision from the FOMC in January. Markets were eagerly awaiting news on the future of Fed leadership, and the decision was made public on January 30th with Kevin Warsh’s nomination.

Victory Income Investors’ Fixed Income Monthly Update Commentary: December 2025

01/09/2026

November’s CPI report, published in mid-December after the Federal Reserve’s (the Fed) rate setting meeting, was one of the first reports to cover the period of the government shutdown. November CPI declined to 2.7% year-over-year, and Core CPI declined to 2.6% year-over-year. Given the lack of data collection throughout the shutdown there is some investor skepticism surrounding the inflation measure, leading to a lack of meaningful conclusions on inflation despite the decline. The Fed reduced rates once more in December, by 25 basis points. Chair Powell noted, however, that the pace of rate cuts is likely to slow in 2026 and 2027. The absence of data fueled additional dissent within the voting members of the FOMC, with two members calling for no cuts and one member calling for a jumbo cut. At the end of the month markets were more hesitant to price future cuts, with only some degree of confidence that it will come in the middle of the year.

Integrity Monthly Commentary: December 2025

01/08/2026

Around mid-year 2024, value characteristics started to underperform significantly. That trend continued through 2025. 

2025 was a momentum market with narrow leadership, driven by retail investors and short-term traders.

Victory Income Investors’ Year in Review & 2026 Outlook

12/29/2025

In the second half of 2025 we saw uncertainty surrounding monetary policy continue. While economic data signaled a weaker labor market and inflation persisted above target, risk assets consistently performed positively. Despite prices reflecting positive investor sentiment, markets largely expect a deceleration in economic growth in 2026 driven by multiple factors including tariff policy, employment weakness and stretched valuations. The Fed started to cautiously ease again, but division within the Fed on what represents the largest threat to the economy is likely to continue into 2026, particularly given pressure from various parties to reduce rates. 

Integrity Monthly Commentary: November 2025

12/10/2025

Which scenario will the market bless: Continued Magnificent 7, Hyperscaler, AI driven momentum investing; a pivot to smaller more value-oriented companies; or none of the above? 

Victory Income Investors’ Fixed Income Monthly Update Commentary: November 2025

12/05/2025

October’s CPI report was cancelled in late November following the government shutdown given the Bureau of Labor Statistics was unable to retroactively collect the data. November’s CPI report has also been pushed out to December 18th, leaving many market participants and the Federal Reserve (the Fed) without critical data heading into the December FOMC meeting starting on the 9th. While alternative data exists such as state-level jobless claims or private data reports on inflation the data blackout caused some market volatility in November. At the end of the month markets were still pricing in an 83% chance that the Fed will cut in December, but the conviction of this bet fluctuated notably throughout the month.

Victory Income Investors’ Fixed Income Monthly Update Commentary: November 2025

12/05/2025

October’s CPI report was cancelled in late November following the government shutdown given the Bureau of Labor Statistics was unable to retroactively collect the data. November’s CPI report has also been pushed out to December 18th, leaving many market participants and the Federal Reserve (the Fed) without critical data heading into the December FOMC meeting starting on the 9th. While alternative data exists such as state-level jobless claims or private data reports on inflation the data blackout caused some market volatility in November. At the end of the month markets were still pricing in an 83% chance that the Fed will cut in December, but the conviction of this bet fluctuated notably throughout the month.

WestEnd Advisors' Mid-Quarter Macro Update Q4 2025

11/20/2025

A government shutdown-induced data blackout temporarily reduced visibility into the state of the economy. Our analysis of alternative data sources, such as high-frequency data, suggests that economic activity has held up well in recent months following a slowdown in the 1H of the year, driven by resilient consumer spending and productivity gains.

Integrity Monthly Commentary: October 2025

11/07/2025

2025 could possibly be the worst year ever for active managers in the small cap space. Less than 2% of managers outperformed their respective Russell 2000 benchmarks in October. Year-to-date performance (YTD) is only slightly better. In fact, the average small cap value manager has trailed the Russell 2000 Value by over 500 basis points this year, and roughly only 15% of managers have beaten the benchmark. The last six months have been worse with the average manager trailing by over 600 basis points. (Jefferies: SMID- Mgr Scorecard 11/2/2025)

Victory Income Investors’ Fixed Income Monthly Update Commentary: October 2025

11/05/2025

September CPI, reported in October, rose to 3.0% year-over-year and Core
CPI declined to 3.0% year-over-year. In October the Federal Reserve (the Fed)
cut rates, meeting market expectations. The rate cut came as the Fed is facing
the additional challenge of less available data due to the government
shutdown. September inflation was tamer than expectations but Chairman
Powell’s press conference following the rate decision had a more hawkish
than expected tone, highlighting that there are still concerns about inflation
within the FOMC (Federal Open Market Committee). We saw two committee
members dissent at October’s meeting, in opposite directions, making this the
third time this has occurred since 1990. Markets are still pricing in one more
cut for 2025 but have reduced the number expected in 2026 from 4.5 to 3 in
response to Powell’s comments.

Integrity Monthly Commentary: September 2025

10/08/2025

Our Mid Cap Value and SMID Value strategies beat their respective benchmarks for the third quarter of 2025. However, I don’t recall a quarter in the years we have been managing money where we underperformed (Small Value Strategy) by so much yet still felt it was a solid quarter. According to Morningstar data, the Russell 2000 Value Index ranked in the 8th percentile for the quarter. While we trailed the index, our performance placed us in the top quartile for the quarter.

Victory Income Investors’ Fixed Income Monthly Update Commentary: September 2025

10/03/2025

August CPI, reported in September, rose to 2.9% year-over-year and Core CPI remained at 3.1% year-over-year. In September the Federal Reserve (the Fed) cut rates, meeting market expectations. The rate cut came as the Fed is facing a unique set of challenges: elevated inflation, weaker but not terrible labor data, and a high degree of uncertainty. The Fed has shown increased sensitivity to downside risks to full employment, indicating that they will be focused on future jobs reports. Markets are pricing in two more interest rate cuts through 2025 at the October and December meeting, increasing expectations month over month.

Integrity Monthly Commentary: August 2025

09/10/2025

Finance class will tell you the price of anything is the sum of its discounted cashflows. Pretty simple. That same class will tell you that the stock market is a real-time discounting mechanism making future estimates of these cashflows. Or as Morgan Housel says, “every market valuation is a number from today multiplied by a story about tomorrow.” This is where the opportunities and threats evolve in investing.

Victory Income Investors’ Fixed Income Monthly Update Commentary: August 2025

08/09/2025

July CPI, reported in August, remained at 2.7% year-over-year and Core CPI rose to 3.1% year-over-year. In August Chair Powell led his last Fed annual symposium in Jackson Hole Wyoming. During this speech Powell signaled a bit more definitively that the Fed may reduce rates in September, but reemphasized that these decisions hinge on the economic conditions versus political pressure from the executive branch. Market pricing for interest rate cuts held at two cuts through 2025, slightly increasing expectations month over month.

Integrity Monthly Commentary: July 2025

08/08/2025

Last month, we highlighted how the cheapest stocks in our benchmarks (measured by price-tocashflow) were significantly underperforming this year. This month, we present new data confirming and expanding on that information. Further, we highlight two recent articles touting the timeliness and benefits of small cap investing. We also briefly touch on the role indexing and basket trading may play in relative performance. 

Victory Income Investors’ Fixed Income Monthly Update Commentary: July 2025

08/08/2025

June CPI, reported in July, rose to 2.7% year-over-year and Core CPI rose to 2.9% year-over-year. The Federal Reserve (the Fed) kept rates at 4.25%-4.50% at their July meeting. The Federal Open Market Committee (FOMC) voted 9-2, which marks the first time in more than 30 years that two voting members voted against a rate decision. In the press conference following the decision, Chair Powell indicated to reporters that it’s still too soon to comment on a September cut.

Integrity Monthly Commentary: June 2025

07/08/2025

The first half of the year has been nothing short of challenging. Tariffs, Department of Government Efficiency (DOGE) spending cut noise, deficit concerns, wars, and interest rate volatility all created bouts of short-term heartburn.

Victory Income Investors’ Fixed Income Monthly Update Commentary: June 2025

07/07/2025

May CPI, reported in June, rose to 2.4% year-over-year and Core CPI held at 2.8% year-over-year. The Federal Reserve (the Fed) kept rates at 4.25%-4.50% at their June meeting. The decision was unanimous, reiterating the “wait and see” approach amidst uncertainty in the economic outlook. With expectations for weaker growth becoming consensus and driving rate cut expectations, Chair Powell noted that the Fed must be forward looking in its policy making. The July 9th tariff deadline has prompted questions as many trade deals are still in flux, and the true economic impact remains to be seen. Market pricing for interest rate cuts has been all over the place year-to-date, but ended the month at 2.5 cuts through the end of the year.

Victory Income Investors’ 2025 Mid-Year Outlook

06/30/2025

The economy has proven to be quite resilient despite elevated policy uncertainty. Corporate profitability remains robust and the unemployment rate, although off its lows, remains at a low level. While the inflation rate has trended down, the cumulative impact of price increases has taken a toll on the consumer. Coupled with the uncertainty over the final levels of U.S. tariffs, which have generated concern over economic growth as well as inflation, the probability of a recession has increased to 40%, up from 20% at year-end 2024, according to Bloomberg median consensus. At a minimum, the tariff situation has led to an expectation of slower growth and increased economic uncertainty. 

Victory Income Investors’ 2025 Outlook

12/16/2024

Fixed income investors may benefit from higher yields, as historically, fixed income returns have been highly correlated to starting yields. In our view, the potential for increased inflationary pressures and tighter-than-historical average credit spreads supports defensive credit positioning.

Victory Income Investors' 2024 Mid-Year Outlook

06/30/2024

Fixed income investors may benefit from higher yields as historically, fixed income returns have been highly correlated to starting yields. In our view, elevated recession risks and tighter-than-historical average credit spreads support defensive credit positioning.

Victory Income Investors - Monthly Fixed Income Market Update

06/30/2024

Year-over-year CPI for May came in at 3.3% driven by services inflation. This is down from 3.4% in April. Year-over-year Core CPI decreased as well, to 3.4%. June’s FOMC meeting left markets with the understanding that the Fed expects inflation to remain elevated in the near term but anticipates it will fall in 2025.

Integrity Catalyst Monthly

06/30/2024

Late-cycle conditions continue with the economy facing lagged impacts of Fed tightening, tougher lending standards, and declining profits. We continue to avoid or underweight the most economically cyclical parts of the markets.

Victory Income Investors - Monthly Municipal Bond Market Update

08/31/2023

Munis returns remain positive year-to-date, despite negative returns for the month across all fixed income indices, driven largely by a continued rise in rates.

WestEnd Advisors - Lingering Late-Cycle, Lagged Headwinds

08/31/2023

Late-cycle conditions continue with the economy facing lagged impacts of Fed tightening, tougher lending standards, and declining profits. We continue to avoid or underweight the most economically cyclical parts of the markets.