Osterweis Capital Management Q3 2026 Strategic Income Outlook

Risk assets performed exceptionally well in the second quarter. The S&P 500 rallied an eye-popping 15% during the period, which was its best return since the second quarter of 2020. From the consumer’s perspective, the price of gas is one of the few assets that does not psychologically adjust with inflation. For now, the ongoing wave of hyperscaler CapEx has lifted profits, and U.S. corporations are doing exceptionally well. U.S. Treasury supply continues to increase in order to fund growing deficits, which will keep upward pressure on rates.

Although economic conditions did not change much between the first and second quarters, investors were far more bullish in the second quarter. Risk assets performed exceptionally well in the second quarter. The S&P 500.