Second Quarter Newsletter
Responsible Guidance: Second Quarter 2026 Newsletter, July 2026
America Celebrates 250 Years of Independence.
We Celebrate the Opportunity to Guide You To and Through Financial Independence…
This year, America celebrates the extraordinary milestone of 250 years since signing the Declaration of Independence. It is a reminder that lasting accomplishments are built on vision, perseverance, and long-term thinking.
Financial independence is built much the same way. Though everyone’s Personal Economy℠ is unique, the journey can require thoughtful planning, disciplined investing, and the confidence to stay focused during changing economic and market conditions.
The first half of 2026 did not progress in a straight line. Markets experienced periods of uncertainty as investors evaluated inflation, interest rates, and geopolitical events. Yet history has shown that disciplined investors are often better positioned than those who react to short-term headlines.
At Baron Financial Group, that is the philosophy behind Your Personal Economy℠. Rather than allowing daily market movements to dictate decisions, we focus on building financial independence throughout your lifetime. As we review the second quarter and first half of 2026, we hope you are not only updated about what has happened in the economy and markets but understand and are confident in our approach for you. Your Personal Economy℠ is at the center of the process, and we aim to help you answer the most important financial question: “Am I going to be okay?”
A Global Perspective
A core objective for our customized Baron Financial Group investment strategies is global diversification, meaning strategies can include investments based both in the U.S., as well as internationally in developed and emerging countries. There are popular benchmark indexes that provide perspectives about the performance of global investments.
The MSCI ACWI All Cap Index represents stock investments across 23 developed and 24 emerging markets. The index rebounded from first quarter performance and was up 14.89% in the second quarter, and up 11.75% for the first half of 2026. Though geopolitical tensions and inflation concerns remain, popular equity indexes across the globe experienced a solid second quarter, helping bring year-to-date performance into positive territory.
The FTSE World Government Bond Index tracks sovereign debt from 20 countries, denominated in their respective currencies. The index was basically flat in the second quarter, up 0.68%. Year-to-Date (YTD) performance was slightly negative at -0.38%. The index's modest loss reflected the complex interplay between flight-to-quality demand that usually occurs for bonds during times of geopolitical unrest, offset by inflation concerns, and the impact of dollar-strength on international bonds.
U.S. Economy
The U.S. economic growth experienced a slight acceleration in the second quarter. Growth is expected to continue, but possibly at a reduced rate. Jobs continue to be added, but the unemployment rate remains above 4%. The Federal Reserve has held steady during recent meetings, as inflation concerns resurfaced.
According to the Bureau of Economic Analysis (BEA) the U.S. economy grew by 2.1% in the 1st quarter of 2026, based on the third and final estimate. The primary drivers for growth were increases in investments, exports, government spending, and consumer spending (the full press release can be found at https://www.bea.gov).
Because GDP is reported with a delay, the Federal Reserve Bank of Atlanta publishes a “nowcast” by estimating GDP growth for the most recent quarter (in this case the second quarter of 2026) using an approach like the BEA. On July 8, 2026, the estimate for second quarter GDP from the Federal Reserve Bank of Atlanta suggests growth may continue, forecasting a 1.3% growth rate. Please note that this estimate updates regularly and is subject to change. The “nowcast,” along with the methodology, and additional information can be found at: https://www.atlantafed.org/cqer/research/gdpnow.
According to the Bureau of Labor Statistics (BLS), the U.S. gained 57,000 jobs for the month of June, and the unemployment rate decreased to 4.2% from 4.4% at the start of the year. BLS indicated job growth was notable for professional and business services, social assistance, and health care, while leisure and hospitality lost jobs (full press release can be found at: https://www.bls.gov).
U.S. Stocks
The S&P 500, an index consisting of roughly 500 of the largest U.S. domestic stocks, regained positive momentum in the second quarter. Technology companies, particularly semiconductor manufacturers and businesses supporting artificial Intelligence (AI) infrastructure helped the index gain 15.2% in the quarter and drove YTD performance to 10.21%.
For technical analysts and trend followers, the index moved above the 50-day and 200-day moving averages in April. The index remained above 200-day through the end of the quarter but oscillated around the 50-day near quarter end.
Dividing index components into growth and value, growth-focused stocks regained performance leadership in the second quarter after value-focused stocks outperformed in the previous 2 quarters. Growth stocks have mostly dominated over the last decade. Value last outperformed on a calendar-year basis in 2022, when most equity indexes were struggling.
International Stocks
International-developed-country stocks (such as those in the European Union and Japan), measured by the MSCI EAFE index, turned positive in the second quarter, up 10.82% for the quarter and up 9.44% YTD.
Non-developed, or emerging-country stocks (such as those located in Brazil, India, and China), measured by the MSCI EM index, benefited from the tech rally across the globe, gaining 24.05% in the second quarter helping produce a 23.85% gain YTD. This was the best performing index, of those we cover in this newsletter, for the first six months of the year.
The strength outside the United States reinforces an important investment principle which is that leadership rotates. Maintaining global diversification helps investors participate when leadership shifts from one region of the world to another.
Bonds
U.S. Domestic Fixed Income (bonds), as measured by the Barclays U.S. Aggregate Bond Index (gauges performance of investment-grade intermediate bonds), was relatively flat, up 0.67% the second quarter, bringing YTD performance to 0.62%. The Federal Reserve paused its rate-cutting cycle that started in September 2025 and continued to hold rates steady through its June 2026 meeting. The decision reflected a willingness to take time evaluating inflation, employment, and geopolitical information. When demand for bonds increases, typically prices rise and interest rates fall, possibly resulting in gains for existing bond holders. However, the opposite can occur when there are more bond sellers than buyers.
The 10-year U.S. Treasury bond yield finished the second quarter at 4.44%, slightly higher than 4.18%, at the start of the year.
We continue to monitor shape of the yield curve for U.S. debt issues because it has historically provided insight into investor expectations for economic growth. A positively sloped curve (long-term rates higher than short-term rates) indicates potential future economic expansion. A flat spread (long-term rates match short-term rates) is a possible indicator of economic uncertainty. An inverted spread (short-term rates are higher than long-term rates) possibly indicates future economic contraction.
At the end of the second quarter, the 2-year rate was 4.14% (and 10-year, 4.44% per above), keeping the shape of the yield curve positive, at 30 basis points (a basis point represents 1/100 of 1%). However, the shape of the curve was flatter than at the start of the year, at 71 basis points. With the Federal Reserve pausing interest rate cuts, short-term rates have moved up, causing the flatter shaped curve and possibly indicating that bond investors are less confident about future U.S. economic growth.
Housing and Real Estate
Commercial real estate, as measured by the FTSE NAREIT All Equity REIT (Real Estate Investment Trust) Index, was up 10.73% in the second quarter, and finished the first half of the year, up 14.90%. The strength in REITs may have surprised some. Typically, they are interest rate sensitive, but this year growing cash flows, healthy balance sheets, and attractive valuations have stood out for these investments.
According to Freddie Mac (FM), the average 30-year residential home mortgage rate increased to 6.49% (as of 07/09/2026) from 6.15% at the start of the year. At this time a year ago, the rate was 6.72%.
Natural Resources
The Bloomberg Commodity Index gave back a portion of its strong first quarter gains, falling 8.08% in the second quarter. Oil prices and precious metals, like gold, contributed to the second quarter’s decline. YTD performance remained positive, up 14.36%.
Baron Client Strategies
Planning for multiple outcomes with Your Personal Economy℠ is critical to helping our clients answer the simple question "Am I going to be OK?".
As Registered Investment Advisers (fiduciaries) and Fee-Only advisors, we do not receive a commission for making investment transactions. Our decisions are grounded in your goals. A primary reason your Baron team makes trades is to align clients' portfolios with their customized, risk-appropriate globally-diversified strategy. We believe these actions potentially strengthen clients' portfolios or financial positions. We use this same approach with our own personal money.
No matter the economic environment, our basic principles remain: Create a globally-diversified and risk-appropriate strategy. Validate the investment choices versus peer investments. Rebalance when needed. Test the strategy in a comprehensive financial plan and obtain regular feedback to update information and advance your financial position.
Your Service Plan
One of our primary roles is to educate our clients to make informed decisions about reaching their goals. Critical to that process are plan reviews, a process that focuses our attention on your goals, takes account of any changes in your situation, and allows us to alter the course, as necessary. If you have experienced any changes to your financial position or are considering changing financial goals and objectives, please let us know.
Your Personal Economy sm
Over the last 250 years the opportunities to achieve financial independence have increased dramatically. Americans have gone from conducting business through barter and coins to carrying sophisticated financial tools in their pockets. Today we can access diversified investment portfolios, retirement plans, online banking, digital payments and comprehensive financial planning tools. The tools have evolved but many of the original principles remain intact to achieve financial independence within Your Personal EconomySM. If you have questions about these planning items or want help with your review, please contact us and we can work with you to identify the many factors that can influence you and Your Personal EconomySM. |
Concluding Comments
America’s first 250 years remind us that lasting progress is built through perseverance, adaptation, and a willingness to plan beyond the immediate moment. The first half of 2026 offered investors a similar experience. Markets can change quickly, but having a plan in place helps stay on track during times of uncertainty.
Financial independence does not require correctly predicting each market move. It requires a plan that reflects Your Personal EconomySM including your goals, resources, willingness and ability to take risk, and the ability to remain focused when the headlines become distracting. As America celebrates 250 years of independence, we are grateful for the opportunity to help guide you to, and through, your own financial independence.
Baron Updates
Celebrating Fran Weizman's Retirement
After nearly 20 years with Baron Financial Group, Fran Weizman is retiring. She has been a valued member of the Baron family, and we are grateful for her friendship, dedication, and the exceptional care she has provided to our clients over the years. While this marks the end of an incredible chapter, we're happy to share that we won't be saying goodbye. Fran has agreed to stay on as a consultant when needed, and we look forward to continuing to see her at our client events—and we hope to see you there, too!
Save the Date: Client Appreciation Casino Night
Please mark your calendar for our next Client Appreciation Casino Night on Thursday, October 8, 2026, in NJ. We're looking forward to another fun evening with our clients, friends, and the Baron team. Additional details will be shared soon. We hope you'll join us!
As we move into the third quarter, we invite you to visit our website blog for timely resources designed to support your financial journey. Please read or view our educational content on a wealth of financial topics, such as retirement and financial planning, Social Security, Market Update videos, Medicare, and some smart and safe travel tips too! If you are wondering what documents are important to update, read our blog outlining key documents that should be reviewed periodically to ensure everything stays current.
As always, our advisors are honored to be a trusted resource—not only for our clients, but also for journalists seeking insights into financial planning and investing. You can explore some of these featured articles in our blog as well.
For those of you who are new to the Baron portal, you can visit our website to gain access to your client portal. Just click on the client-portal tab, which will allow you to view your account information. The client login requires a username and password to gain access to the portal. Please let us know if you would like to create your portal login or if you would like to learn more about what the portal provides, including paperless statements. Please also let us know if you would like to transition to the newer portal. Contact Baron at 1-866-333-6659 or at info@baron-financial.com to enroll.
Please contact us if you would like a copy of our current registration (ADV) with the Securities and Exchange Commission. You can contact our firm (www.baron-financial.com) at 1-866-333-6659 or at info@baron-financial.com. You can also find our ADV through the Investment Adviser Public Disclosure system at www.adviserinfo.sec.gov.
We look forward to staying connected and continuing to support you every step of the way. Please let us know if you have any questions or changes to discuss with us.
As always, thank you for your continued support!
Warmest Regards,
Baron Financial Group, LLC
www.baron-financial.com
This material is not intended to be relied upon as a forecast, research, or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of July 14, 2026, and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by Baron Financial Group to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. Past performance is no guarantee of future results. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Investment involves risks. International investing involves additional risks, including risks related to foreign currency, limited liquidity, less government regulation, and the possibility of substantial volatility due to adverse political, economic, or other developments. The two main risks related to fixed income investing are interest rate risk and credit risk. Typically, when interest rates rise, there is a corresponding decline in the market value of bonds. Credit risk refers to the possibility that the issuer of the bond will not be able to make principal and interest payments. Index performance is shown for illustrative purposes only. You cannot invest directly in an index. Diverse types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for a client or prospective client’s investment portfolio. Historical performance results for investment indices and/or categories generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results. Inclusion of index information is not intended to suggest that its performance is equivalent or like that of the historical investments whose returns are presented or that investment with our firm is an absolute alternative to investments in the index (if such investment were possible). Investors should be aware that the referenced benchmark funds may have a different composition, volatility, risk, investment philosophy, holding times, and/or other investment-related factors that may affect the benchmark funds’ ultimate performance results. Therefore, an investor’s individual results may vary significantly from the benchmark’s performance.