Quarterly Economic Review 2nd Quarter 2026

Easing Into Summer

Following a spike in volatility at the onset of the Iran conflict and a first-quarter sell-off in risk assets, global stock markets rebounded in the second quarter. Oil prices have also declined in recent days as hopes for a reopening of the Strait of Hormuz have helped ease price pressure, while interest rates have stabilized near the upper end of their recent range. That said, as we cross the midpoint of 2026, uncertainty remains the order of the day with on-again, off-again geopolitical tensions driving a steady stream of disruptions.

Successfully navigating these challenges, however, isn’t about predicting what will happen. It’s about managing expectations and emotions through the turmoil with a focus on preserving your wealth, pursuing opportunities for tax-efficient growth, and thoughtfully meeting your short-term, long-term and generational goals.

So, let’s take a closer look at what’s recently transpired and what our outlook is for the balance of the year ahead:

Blockades, Benchmarks, and Bottlenecks

The Global Oil Prices and the Iran Conflict Impact

• Brent crude, the major global benchmark for pricing crude oil, surged from a pre-war baseline of roughly $70 per barrel to $138 per barrel on April 7, 2026.
• This $50+ premium cascaded rapidly into refined petroleum products, triggering a wholesale price increase of 50% to 60% for diesel, gasoline, and jet fuel.
• The resulting energy crunch added to global inflationary pressures, forcing central banks like the Bank of Japan and the Federal Reserve to maintain hawkish stances and consider interest rate hikes to combat pervasive, supply-side cost increases.

1-Year Brent Crude Daily Price Chart¹

Relief finally emerged in mid-June, when Washington and Tehran agreed to a multi-front ceasefire and a 60-day window for nuclear negotiations. The agreement led to an immediate 15% drop in oil prices.

However, energy analysts warn that a full economic recovery will take time, with a full unwinding of the war's ‘risk premium’ expected to drag on well into the latter half of the year.

Gas, Groceries, and Grounded Dreams

1-Year Monthly CPI Data²

• Even though core inflation (which strips out volatile food and energy costs) is a more moderate 2.9%, the impact of several years of elevated prices has left many household budgets severely strained.
• Real average weekly earnings have contracted slightly in recent months, meaning wage growth isn’t keeping pace with this latest wave of cost increases.
• First-time home buyers now find themselves squeezed between high home prices and climbing borrowing costs. The median price for an existing home hover near historic highs at roughly $429,300, requiring an annual household income of well over $100,000 to qualify for a conventional loan.³
• The latest flare-up of inflation derailed an early-year downward trend in mortgage rates. The average 30-year fixed rate quickly rebounded from its winter low near 6.1% back up to 6.52% by mid-June, driving down existing home sales to near multi-decade lows and sustaining high rental market prices.⁴

Defying the Downturn

1. The Tech/AI Shield The S&P 500 index is heavily driven by mega-cap technology, semiconductor, and AI infrastructure stocks; companies that tend to be cash rich, with little to no debt, and insulated from domestic consumer weakness thanks to massive global corporate spending on AI (tech spending is projected to be in the hundreds of billions for 2026).

2. Energy Sector Hedge While a $138/barrel oil spike damages consumer disposable income, it also serves as a massive windfall for the Energy sector. Energy companies within the S&P 500 index saw their profit forecasts revised upward (in some cases) by nearly 70% during the peak of the Hormuz blockade; providing a major fundamental floor for the broader index.5

3. Robust Corporate Earnings Despite supply-side inflation, large corporations have demonstrated an extraordinary ability to sustain strong earnings. Overall, first-quarter corporate earnings far outpaced expectations, with the outsized profitability in the technology and energy sectors offsetting shrinking profit margins in consumer and goods-related sectors.

4. The Ceasefire Catalyst The moment Washington and Tehran agreed to a mid-June ceasefire, institutional investors began pricing in the normalization of global supply chains and the deflation of the war’s risk premium. The 15% drop in Brent crude prices sent a clear signal to the market that the worst of the energy-driven inflation spike may well be behind us.

Looking Ahead

Uncertainty remains a prevalent theme of both the U.S. and global economies and markets, and much continues to be in flux. At the time of writing this update:

We Are Here for You

Contact your BLBB wealth advisor for more information

We're here to help you navigate these uncertain times with confidence.

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¹ https://www.macrotrends.net/2480/brent-crude-oil-prices-10-year-daily-chart
² https://tradingeconomics.com/united-states/inflation-cpi
³ https://www.ibtimes.com/us-existing-home-sales-hit-2026-high-despite-elevated-mortgage-rates-3803894
⁴ https://fred.stlouisfed.org/series/MORTGAGE30US
⁵ https://fortune.com/2026/06/14/oil-iran-war-big-winners-us-producers-chevron-exxon-shale-refiners/
⁶ https://www.nytimes.com/2026/06/18/business/dealbook/warsh-fed-rates.html

Disclosures

Investment advisory services are provided by BLBB Advisors, a Pennsylvania-based investment advisor registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940. Additional information about BLBB is available in our current disclosure documents which are available on BLBB’s website (www.blbb.com) or the SEC’s public disclosure database (IAPD) at www.adviserinfo.sec.gov.

This content is intended for informational purposes only and should not be construed as personalized investment advice. Please consult with your wealth adviser before making any investment decisions.

Certain information contained herein may be historical in nature while other responses may represent forward-looking statements. There are no guarantees that historical events will or may, repeat themselves. Forward-looking statements reflect the judgment of BLBB Advisors as of the date of publication and are subject to change without notice. They are not guarantees and involve risks, uncertainties, and assumptions that are difficult to predict.

BLBB’s investment approach incorporates, among other things, asset allocation and portfolio diversification. While these strategies are designed to limit risk, there is no guarantee that such strategies alone, or in combination, will guarantee against a loss of principal.

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