In the second quarter of 2026, alternative investments (“alternatives”) on average had positive, but muted returns, especially when compared to the double digit returns of equities in both domestic and global markets. As the U.S. sought to de-escalate the Iranian conflict and open the Strait of Hormuz, oil prices retreated while investor focus shifted back to the developments in artificial intelligence (AI). The Federal Reserve entered a new leadership era as Kevin Warsh succeeded Jerome Powell as Chair. There were some who expected the new Chair to acquiesce to calls from the White House and aggressively lower rates. Very quickly, that notion was dispelled. The Federal Reserve (the “Fed”) did not change interest rates at their June meeting, but they did signal inflation was a concern and this flipped market expectations from rate cuts to rate hikes. In response, short rates moved appreciably higher.

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