CHIEF INVESTMENT OFFICE

Capital Market Outlook

May 27, 2025

All data, projections and opinions are as of the date of this report and subject to change.

IN THIS ISSUE MACRO STRATEGY 

Macro Strategy—Compelling Risk-on Underpinnings: While the path forward may remain Chief Investment Office
jagged, the economic outlook has significantly improved from just a few weeks ago, helping Macro Strategy Team
Equities rebound sharply. Led by economically sensitive and Artificial Intelligence (AI)-related
areas of the market, the rally confirms the favorable signals for continued expansion coming MARKET VIEW 
from the credit markets and the industrial/domestic investment side of the economy.
Ariana Chiu
If resilient demand, restrained inflation and AI-led productivity gains continue as we expect, the Wealth Management Analyst
market is well positioned to look past what appears to be a more tolerable, if unevenly
distributed, one-off tariff impact than had been feared. Indeed, despite market volatility, THOUGHT OF THE WEEK 
forward earnings estimates have remained near records. Still, risk assets are likely to remain on
Emily Avioli
high alert to changes in policy, interest rates and economic conditions. Focus will rightly remain Vice President and Investment Strategist
on the efficacy of promised supply-side policy offsets to tariff effects.
Jordy Fuentes
Market View—Some Hard Truths Confronting America’s “Manufacturing Renaissance”: Wealth Management Analyst
After running a merchandise trade deficit for nearly half a century straight, the U.S. is now
serious about “reshoring” production. Both political parties are in favor of producing more
MARKETS IN REVIEW 
goods at home—especially when it comes to strategic technologies that are crucial to U.S.
national security. Data as of 5/27/2025,
Yet lost in the debate over whether the U.S. should reshore production is whether the U.S. and subject to change
can—that is, whether the U.S. has the labor, infrastructure and regulatory environment to
enable and sustain a so-called “manufacturing renaissance.” For now, call us cautiously Portfolio Considerations
optimistic. While infrastructure investment has soared this decade, the road to reshoring—
whether it be finding workers, reducing dependencies on China for key materials, or tackling We expect a sawtooth market price
excessive project timelines—may be bumpier than often appreciated. The good news is that pattern to continue in the short-term as
bumps in the road suggest ample opportunity for investors. Labor shortages imply greater trade deal headlines combine with
demand for automation. Increasing production at home augurs for still-higher power demand, concerns over stagflation.
supporting longer-term growth in electrical equipment, power generation, and transmission and We maintain an overweight to Equities,
distribution. Reshoring is here to stay, in our view, but won’t be without its obstacles. Nostalgia driven by U.S. Equities, with a preference
for a return to “Made in USA” is one thing; actually reshoring production is another. for Large-caps over Small-caps, and we
Thought of the Week—Q1 Earnings Recap: Big Beat, Bigger Uncertainty: The S&P 500 are neutral outside of the U.S. We still
Index is on track for 12.9% year-over-year (YoY) growth in earnings-per-share (EPS) for Q1. favor a significant allocation to bonds in
This marks the seventh consecutive quarter of YoY profits acceleration and the second a well-diversified portfolio.
consecutive quarter of double-digit growth for the index. It’s a strong showing, but with Q1 in Long-term investors that drift too far
the rearview mirror focus has shifted to the dark clouds obscuring the road ahead. Q1 results from their asset allocation objectives as
may have been strengthened by a pull forward in demand ahead of tariff policy market volatility picks up from time to
implementation. A closer look at reports suggests that companies are pausing plans or time should consider rebalancing (adding
deferring decisions to avoid getting whipsawed by the shifting policy outlook. Estimates for to Equities) on weakness, as we believe
future quarters have come down, and Q2 results are likely to be noisy as delays, supply chain we ultimately resume better growth
disruptions and dampened demand start to filter into earnings. While uncertainty has weighed prospects for the economy and earnings
on the earnings outlook for 2025, it’s our view that sturdy fundamentals should still support full in 2026.
year earnings growth in the low-to-mid single digits for the S&P 500 Index.
Through periods of volatility, we
emphasize portfolio diversification within
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MACRO STRATEGY
Compelling Risk-on Underpinnings
Chief Investment Office, Macro Strategy Team
Investment Implications
The de-escalation of U.S.-China trade tensions has eased supply chain concerns and lowered
the effective U.S. tariff rate to around 15% on about $3.3 trillion in goods imported into the Continued expansion with
U.S. Though still imposing the highest tariff burden in over a century, the policy pivot moderate inflation favors risk-
significantly reduces inflation risks while improving real growth and earnings prospects. asset outperformance. Still,
Diminished recession odds—paired with an incoming stream of “not too hot, not too cold” sentiment should be tempered by
data and stable interest rates—have quickly revived equity markets out of their April swoon. vigilance toward interest rate and
Indeed, if the data through mid-May is any indication, the U.S. economy is neither tariff-related pressures on
overheating nor unraveling, confirming the favorable signals all along coming from relatively earnings. Thus, we remain in favor
unfazed corporate credit spreads. Despite wobbly consumer and business sentiment, “hard of Large-caps over Small-caps, and
data”—factual evidence of economic conditions—suggest enough growth to keep higher quality Growth assets in
unemployment steady, inflation on the right track, and profit estimates firm. general.
For example, new claims for unemployment compensation remain comfortably far from
levels associated with economic downturns, and so does wage and salary growth. As a
result, consumer spending has remained solid. Even after their sharp March spike on tariff
frontloading, retail sales ticked slightly higher in April, and Bank of America card data
indicate continued moderate household spending in early May. The strong March spending
level alone sets real consumer spending up for a solid Q2 gain—after a robust and better-
than-expected 1.8% annualized increase in Q1. Overall, real gross domestic product
estimates are now back well into normal expansion territory, with over 2% estimated
growth in Q2, according to both the Federal Reserve (Fed) Bank of Atlanta and the New
York Fed, for instance.
With domestic demand holding up better than expected and odds of a recession fading,
green shoots shouldn’t be surprising on the manufacturing front. The Philadelphia Fed
survey of manufacturing expectations surged in May, entirely reversing this year’s plunge.
As shown in Exhibit 1A, the national Institute for Supply Management (ISM) manufacturing
index looks set to stabilize. In fact, it probably should do so soon to better align with the
industrials’ sector equity-market leadership year to date as government efforts to
revitalize domestic investment and production are starting to bear fruit.
The broad-based loss of inflation momentum has had much to do with the gaping
divergence between spending resilience and consumer sentiment. Indeed, expectations
have been particularly depressed by fears of a tariff-related inflation flareup. Instead,
consumer price index inflation surprised to the downside again in April, rising just 1.6% at
an annualized pace on a 3-month basis and 2.3% year over year. Its trend has been
tempered by disinflation or outright deflation across food and energy, air travel, apparel
and lodging away from home, as well as information technology goods and services, for
example. Once again, inflation proves that it’s “always and everywhere” a monetary
phenomenon: As pandemic-related excess saving thinned out, interest rates increased,
labor demand normalized and wage growth moderated, inflation pressures also faded,
helping extend the expansion.
Aside from better-than-expected domestic demand and an improved economic outlook,
other key drivers of the V-shaped market rebound over the past month include:
• Strong and better-than-expected Q1 earnings growth, with 57% of S&P 500
companies reporting margins increase, along mid-cycle levels. 1
• Firm forward earnings expectations near record level.
• Optimistic Q1 commentary from large-cap growth companies plus tariff
considerations and idiosyncratic headwinds in traditionally “stable” parts of the market
restored investor confidence in the technology/interactive media faster than in
consumer-related sectors and “defensives.”
• Indeed, technology/interactive media companies continue to dominate earnings, with 60%
of the S&P 500 aggregate earnings growth in Q1, akin to 2024. Their disproportionately
large share of the market and still impressive operating leverage suggest ongoing support
1
Empirical Research Partners. As of May 20, 2025.

2 of 8 May 27, 2025 – Capital Market Outlook RETURN TO FIRST PAGE

 for elevated market free cash flows and share buyback resources, boosting investor
sentiment.
• Favorable business investment news spurring interest in capital goods-producing industrial
companies, utilities, and financials. These include a boost to megacaps’ AI-related capital
expenditure plans for 2025 from +20% penciled in earlier this year to +35%, and a deluge
of Middle East long-term mega contracts for industrial/AI-related U.S. goods and services.
• According to Empirical Research Partners—citing the Census Bureau’s Business
Trends and Outlook Survey covering 1.2 million non-farm businesses—the share of
companies saying they expect to use AI in the next six months to produce goods and
services rose from about 7% in mid-2024 to 11% in early May. The share reporting
using AI in the past two weeks rose from 5% to about 9%, indicating both big strides
and still largely unmet potential.
• Market confidence in supply-side stimulus in line with the administration’s vision for
supply chain reshoring and stronger domestic production. Deregulation, tax incentives,
and reshoring incentives would complement the already strong capital return profile
of U.S. firms (Exhibit 1B), supporting valuations and the “U.S. exceptionalism” trade.
• Additional share buyback announcements to more than $1 trillion already estimated
for 2025—for a likely 15% YoY increase to a new record.
• According to Empirical, the shareholder payout ratio (dividends + buybacks) is about
75% in the U.S. This—coupled with a higher return on equity (ROE) than in the past,
currently of about 20%—implies that investors are “getting back” about 15% of the
equity base per year. This compares to just 5% in Japan and 10% in Europe. The 2010
to 2019 average was about 6% in Europe versus 10% in the U.S., underscoring a
persistently large compounding difference in favor of U.S. Equities that largely
explains their strong relative appeal in recent years. 2
• Despite unresolved government debt/deficit deterioration, interest rates have
remained contained in a narrow range on sustained demand for “risk-free” assets.
In addition, the economic outlook does not call for Fed rate hikes, and reports of
financial sector deregulation favoring higher bank holdings of Treasurys have boosted
confidence in demand for government securities.
• Dollar depreciation tends to be positive for earnings as it makes exports more
attractive and profits from overseas are translated into more dollars.
In sum, the U.S. economy has once again pulled back from the brink, defying expectations.
Tariff policy recalibration and record buybacks strongly underpin the bullish tone of risk-
asset markets. Still, uncertainty about tariff effects remains high, economic growth is seen
slower than before tariffs surged, and valuations are not particularly cheap. While we
remain cautiously optimistic on U.S. Equities, risk assets remain vulnerable to bouts of
volatility and occasional setbacks. Thus, we remain in favor of Large-caps over Small-caps,
and higher quality Growth assets in general.
Exhibit 1: Favorable Risk-on Underpinnings, Including:
1A) Manufacturing Sector Green Shoots… 1B) …and Firm U.S. Shareholder Payout Yields
z-score* ISM Manufacturing Index (z-score*) SECTOR DIVIDEND YIELD BUYBACK YIELD YIELD
4 Consumer Discretionary 0.74% 1.52% 2.26%
Philadelphia Fed Manufacturing Sector Outlook (z-score, advanced 5 Consumer Staples 2.40% 1.56% 3.96%
months) Energy 3.41% 4.13% 7.54%
2 Financials 1.48% 2.52% 4.00%
Healthcare 1.70% 1.61% 3.31%
0 Industrials 1.41% 1.71% 3.12%
Information Technology 0.67% 1.71% 2.37%
Materials 1.98% 1.98% 3.97%
-2
Real Estate 3.39% 0.20% 3.59%
Communications Services 1.02% 3.72% 4.74%
-4 Utilities 3.09% 0.30% 3.39%
2007 - Jan 2010 - Jan 2013 - Jan 2016 - Jan 2019 - Jan 2022 - Jan 2025 - Jan S&P 500 1.34% 1.96% 3.31%

Exhibit 1A) *z-score=number of standard deviations from the mean of a data set. Gray bars represent recessionary periods. Sources: ISM, Federal Reserve Bank of Philadelphia/Haver Analytics.
Data as of May 21, 2025. Exhibit 1B) Source: S&P Global: S&P 500 Q4 2024 Buyback Report. Uses full values (unadjusted for float). Dividends based on indicated; buybacks based on the last 12
months ending Q4, 2024. Please refer to index definitions at the end of this report. It is not possible to invest directly in an index. Past performance is no guarantee of future results.

2
Empirical Research Partners, May 9, 2025.

3 of 8 May 27, 2025 – Capital Market Outlook RETURN TO FIRST PAGE

MARKET VIEW
Some Hard Truths Confronting America’s “Manufacturing
Renaissance” Portfolio Considerations
Ariana Chiu, Wealth Management Analyst
Automation amid shifting labor
After running a merchandise trade deficit for nearly half a century straight, the U.S. is now force dynamics remains a key
serious about “reshoring” production. Both political parties are in favor of producing more theme for us and an important
goods at home. This is especially true for strategic technologies like semiconductors, beneficiary of greater reshoring
pharmaceutical ingredients, and critical minerals—all of which are crucial to U.S. national demand. As supply chains shift, we
security and remain key focus areas for policymakers in Washington. continue to believe that expanding
Yet lost in the debate over whether the U.S. should reshore production is whether the U.S. can— and upgrading U.S. infrastructure
that is, whether the U.S. has the labor, infrastructure and regulatory environment to enable and implies secular demand for critical
sustain a so-called “manufacturing renaissance.” For now, call us cautiously optimistic. Nostalgia minerals and metals, electrical
for a return to “Made in USA” is one thing; actually reshoring production is another. equipment, and transmission and
Start with Exhibit 2A, whose message is simple: The U.S. is short on manufacturing workers. distribution.
According to the latest Job Openings and Labor Turnover Survey, there are currently nearly half
a million job openings in the manufacturing sector—bringing the manufacturing labor
shortage, defined as the difference between hires and openings, to 130,000 workers as of
March. Openings as a share of total manufacturing employment are now double the share seen
in the mid-2000s.
The reality is, for decades, less advanced production has shifted to poorer countries overseas
while the U.S. has doubled down on the services economy—and the labor force has followed
suit. Manufacturing workers as a percent of total U.S. employment now stands at 8% and has
been in structural decline for years due to offshoring and automation. Meanwhile, efforts to
limit immigration mean current worker shortages are likely to get worse. To wit, foreign-born
workers accounted for 20% and 29% of manufacturing and construction workers respectively
in 2023, the last year of available data. 3
Labor aside, there’s also the question of whether America’s infrastructure is ready for an influx
of domestic production. Here we’d point to the American Society of Civil Engineers’ 2025
Infrastructure Report Card, which recently handed U.S. infrastructure a “C” grade. While
infrastructure investment has soared this decade, the report highlights a $3.7 trillion
investment gap over the next 10 years, assuming current funding levels.
It’s worth noting too that of the near-$2 trillion of funding announced across the Inflation
Reduction Act (IRA), Infrastructure Investment and Jobs Act (IIJA), and the CHIPS Act, less than
40% had been announced or spent through the end of last year (Exhibit 2B). 4 In other words, at
the same time that industrial reshoring and power-hungry AI data centers are sending
electricity demand higher, efforts to upgrade aging U.S. infrastructure (the grid, transit
systems, wastewater management, and more) are just beginning.
Meanwhile, when it comes to the materials required to upgrade U.S. infrastructure and reshore
production, all roads lead to China. From copper (building construction, cables, wires, plumbing)
to graphite (steelmaking, batteries, thermal resistance), China not only often leads in producing
critical minerals and metals—it’s also the refinery of the world (Exhibit 2C). The irony, therefore,
is that while the purpose of reshoring is largely to move away from chronic dependencies on the
second largest economy in the world, there is no “manufacturing renaissance” without China
until and unless the U.S. finds alternative sources for critical minerals and metals.
In the meantime, it's no coincidence that the administration is increasingly focused on
streamlining permitting. It takes 29 years on average to build a new mine in the U.S., for
example—the second longest timeline in the world. Electrical transmission projects take 6.5
years to review on average. Semiconductor fabs, a key target of U.S. reshoring efforts, take
significantly longer to build domestically than overseas—2.5 years on average between 2010
and 2020, to be exact, versus 1.85 years in China and 1.76 years in Taiwan over the same
period. 5 The bottom line: for all the hype surrounding domestic investment announced since

3
U.S. Census Bureau, May 2023.
4
BofA Global Research. Data through December 2024.
5
Center for Security and Emerging Technology.

4 of 8 May 27, 2025 – Capital Market Outlook RETURN TO FIRST PAGE

Liberation Day (April 2), it’s possible that midway through the construction of announced
projects, we’ll be looking at a different president at 1600 Pennsylvania Avenue.
Investment Implications. The good news is that all of the above should mean ample
opportunity for investors. Labor shortages imply greater demand for automation—think digital
twins (virtual models of factories, supply chains and more), “cobots” (collaborative robots that
work alongside humans), or AI-driven management (inventory optimization, predictive
maintenance, quality control, etc.). Just 4.8% of manufacturing firms currently leverage AI,
below economy-wide usage (8.7%) according to the Census Bureau.
Efforts to reshore higher-end production suggest that demand for AI applications to the U.S.
manufacturing sector will only accelerate from here. The stakes are high, with meaningful
implications for U.S. competitiveness. After all, China has installed more industrial robots
than the rest of the world combined since 2021 (and seven times more than the U.S. in
2023 alone, as Exhibit 2D highlights). 6 Automation amid shifting labor force dynamics
remains a key theme for us.
We also continue to believe that secular drivers of greater power demand support longer-term
growth in electrical equipment, power generation, and transmission and distribution. Demand
for real assets, including minerals critical to building physical structures and components of the
U.S. grid, should be positioned for long-term growth.
The Bottom Line: There’s little doubt that existing dependencies on China for everything
from commonly prescribed medications to rare earth minerals will warrant a “manufacturing
renaissance” of sorts in the coming years. Reshoring is here to stay, in our view. Yet the road to
bringing manufacturing back to the U.S.—whether it be finding workers, investing in more
resilient domestic infrastructure, or reforming existing permitting systems—may be bumpier
than is often appreciated.
Exhibit 2: The Road to Reshoring May Be Bumpier Than Expected.
2A) The U.S. Is Short on Manufacturing Workers. 2B) Majority Still Unspent Across IRA, IIJA, and CHIPS Act.
Manufacturing Labor Surplus (+) / Shortage (-), Hirings Minus Openings (Thousands) USD Billions
400 2000
Allocated or Spent
300 Remaining
200 1500
100
0 1000
-100
-200
-300 500
-400
-500 0
-600 Inflation Reduction Infrastructure CHIPS and Science Total
Act Investment and Jobs Act
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025

Act
2C) China Is the Refinery of the World. 2D) China Installed 7 Times More Industrial Robots Than the U.S.
in 2023.
Number of Industrial Robots Installed in 2023, Thousands
Rare Earths China
300
Graphite China 250

Cobalt China 200

150
Lithium Indonesia
100
Copper China
50
Nickel China 0

0% 20% 40% 60% 80% 100%

Share of Refined Production

Exhibit 2A) Source: Bureau of Labor Statistics. Data as of April 29, 2025. Exhibit 2B) Source: BofA Global Research. Data through December 2024, as of May 2025. Exhibit 2C) Data refers to 2023.
Source: International Energy Agency. Data as of May 2025. Exhibit 2D) Sources: International Federation of Robotics, Stanford University AI Index Report 2025. Data refers to 2023, latest
available, as of May 2025.

6
International Federation of Robotics, Stanford University AI Index Report 2025.

5 of 8 May 27, 2025 – Capital Market Outlook RETURN TO FIRST PAGE

THOUGHT OF THE WEEK
Q1 Earnings Recap: Big Beat, Bigger Uncertainty
Emily Avioli, Vice President and Investment Strategist
Jordy Fuentes, Wealth Management Analyst Investment Implications
With 96% of companies in the S&P 500 having reported Q1 earnings results, the index is
Equities currently remain well
on track to beat consensus estimates by 8% with 12.9% YoY growth in EPS. 7 This marks
the seventh consecutive quarter of YoY profits acceleration and the second consecutive supported by a solid earnings
quarter of double-digit growth for the index. backdrop, but uncertainty may
weigh on profits in the near-term.
Healthcare and Communication Services were leaders of the pack in Q1, growing earnings
While we anticipate some noise in
by 43.0% and 29.2respectively. Information Technology earnings offered another bright
upcoming earnings reports, we still
spot, with hyperscalers confirming that the AI investment cycle is still intact. While areas
like Energy and Consumer Staples lagged, eight out of 11 S&P 500 sectors are on track to anticipate full year earnings
report positive YoY EPS growth for Q1, with four tracking double-digit accelerations. It’s growth for the S&P 500 Index.
an unequivocally strong showing for the index.
However, with Q1 in the rearview mirror, focus has shifted to the dark clouds obscuring
the road ahead. Q2 earnings estimates have fallen from 9.3% at the beginning of the
quarter to 5.0% today, suggesting that Q1 results may have been strengthened by a pull
forward in demand ahead of tariff policy implementation (Exhibit 3). Trade deal progress
since the April 2 announcement may suggest a more moderate risk of downward earnings
revisions moving forward, but the outlook remains murky.
A wait-and-see approach was evident in Q1 reports, with companies pausing plans or
deferring decisions to avoid getting whipsawed by the shifting policy outlook. 8 Forecasts
for slower economic growth have also called future consumer demand into question. To
wit, most major airlines have pulled their full-year guidance altogether amid an ambiguous
leisure travel outlook. Q1 marked the highest number of S&P 500 companies citing
“tariffs” on quarterly earnings calls over the past 10 years, the highest mentions of
“recession” since Q4 2022, and the highest mentions of “uncertainty” since Q1 2020. 9
On the upside, some reports underscored that corporate America remains nimble. Tariff
mitigation tactics are underway, including instances of pre-ordering, sourcing and
production shifts, and cost-cutting initiatives. 10
In our view, Q2 results are likely to be noisy as delays, supply chain disruptions and
dampened demand start to filter into earnings. Investors should consider looking farther
out for better insight on where profits will ultimately land. While uncertainty has weighed
on the earnings outlook for 2025, it’s our view that sturdy fundamentals should still
support full year earnings growth in the low-to-mid single digits for the S&P 500 Index.
Exhibit 3: Strong Q1 Results May Represent Demand Pulled Forward.

19%
20%
Current Estimate Estimate as of March 31
16%
15%
S&P 500 YoY EPS Growth

13%
12%
11% 11%
9% 10%
10%
7% 7%
6%
5%
5%

0%
1Q'25 2Q'25 3Q'25 4Q'25 1Q'26 2Q'26

Source: FactSet. Data as of May 27, 2025. Please refer to index definitions at the end of this report. It is not possible to invest
directly in an index.

7
FactSet. May 23, 2025.
8
BofA Global Research. April 27, 2025.
9
FactSet Earnings Insight. May 16, 2025.
10
BofA Global Research. April 27, 2025.

6 of 8 May 27, 2025 – Capital Market Outlook RETURN TO FIRST PAGE

MARKETS IN REVIEW

Equities
Total Return in USD (%) Economic Forecasts (as of 5/23/2025)
Current WTD MTD YTD Q1 2025A Q2 2025E Q3 2025E Q4 2025E 2025E 2026E
DJIA 41,603.07 -2.4 2.4 -1.6 Real global GDP (% y/y annualized) - - - - 2.8 3.0
NASDAQ 18,737.21 -2.5 7.5 -2.7 Real U.S. GDP (% q/q annualized) -0.3 2.0 0.6 1.6 1.5 1.5
S&P 500 5,802.82 -2.6 4.3 -0.8 CPI inflation (% y/y) 2.7 2.6 3.2 3.2 3.0 2.6
S&P 400 Mid Cap 2,977.59 -3.5 4.5 -4.1 Core CPI inflation (% y/y) 3.1 3.0 3.5 3.6 3.3 3.0
Russell 2000 2,039.85 -3.4 4.0 -8.1 Unemployment rate (%) 4.1 4.2 4.3 4.5 4.3 4.6
MSCI World 3,802.77 -1.5 4.2 3.3 Fed funds rate, end period (%) 4.38 4.38 4.38 4.38 4.38 3.38
MSCI EAFE 2,579.57 1.3 3.7 15.8
MSCI Emerging Markets 1,170.98 -0.1 5.4 10.0 The forecasts in the table above are the base line view from BofA Global Research. The Global Wealth & Investment
Management (GWIM) Investment Strategy Committee (ISC) may make adjustments to this view over the course of the
year and can express upside/downside to these forecasts. Historical data is sourced from Bloomberg, FactSet, and
Fixed Income†
Haver Analytics. There can be no assurance that the forecasts will be achieved. Economic or financial forecasts are
Total Return in USD (%)
inherently limited and should not be relied on as indicators of future investment performance.
Current WTD MTD YTD A = Actual. E/* = Estimate. *As of May 23, 2025.
Corporate & Government 4.66 -0.38 -1.53 1.55 Sources: BofA Global Research; GWIM ISC as of May 23, 2025.
Agencies 4.46 -0.02 -0.77 2.05
Municipals 4.09 -0.49 -0.22 -1.24
U.S. Investment Grade Credit 4.82 -0.45 -1.58 1.56 Asset Class Weightings (as of 5/6/2025) CIO Equity Sector Views
International 5.35 -0.52 -1.11 1.14 CIO View CIO View
High Yield 7.69 -0.47 0.94 1.93 Asset Class Underweight Neutral Overweight Sector Underweight Neutral Overweight
Slight over weight green

90 Day Yield 4.33 4.34 4.29 4.31 Global Equities

slight over weight green

    Financials    
2 Year Yield 3.99 4.00 3.60 4.24
Slight over weight green

U.S. Large-cap Growth    

slight over weight green

Utilities    
10 Year Yield 4.51 4.48 4.16 4.57
Slight over weight green

U.S. Large-cap Value    

Consumer slight over weight green

30 Year Yield 5.04 4.94 4.68 4.78 U.S. Small-cap Growth

Slight over weight green

   
   
Slight over weight green
Discretionary
U.S. Small-cap Value     Communication Neutral yellow

Commodities & Currencies International Developed

neutral yellow

    Services
   

Total Return in USD (%) Emerging Markets

Neutral yellow

    Information Neutral yellow

Commodities Current WTD MTD YTD    

Technology
Slight underweig ht orange

Global Fixed Income    

Bloomberg Commodity 252.35 1.8 2.0 5.8 Neutral yellow

Healthcare
Slight underweig ht orange

U.S. Governments        
WTI Crude $/Barrel†† 61.53 -1.5 5.7 -14.2 Slight underweig ht orange Neutral Yellow

U.S. Mortgages     Industrials    

Gold Spot $/Ounce†† 3357.51 4.8 2.1 27.9 Slight underweig ht orange

U.S. Corporates
Neutral yellow

    Real Estate    
Total Return in USD (%)
neutral yellow

International Fixed Income    

Consumer slight underweig ht orange

Prior Prior 2022

neutral yellow

   
High Yield     Staples
Currencies Current Week End Month End Year End
U.S. Investment-grade Slight underweig ht orange

    Energy
slight underweig ht orange

   
EUR/USD 1.14 1.12 1.13 1.04 Tax Exempt Slight underweig ht orange

USD/JPY 142.56 145.70 143.07 157.20 Materials    

Slight underweig ht orange

U.S. High Yield Tax Exempt    

USD/CNH 7.17 7.21 7.27 7.34 Alternative Investments*
Hedge Strategies Neutral
S&P Sector Returns Private Equity & Credit Neutral
Real Assets Neutral
Consumer Staples -0.4% Cash
Communication Services -0.6% *Many products that pursue Alternative Investment strategies, specifically Private Equity and Hedge Funds, are available
Materials -1.2% only to qualified investors. CIO asset class views are relative to the CIO Strategic Asset Allocation (SAA) of a multi-asset
Utilities -1.5% portfolio. Source: Chief Investment Office as of May 6, 2025. All sector and asset allocation recommendations must be
Industrials -2.0% considered in the context of an individual investor's goals, time horizon, liquidity needs and risk tolerance. Not all
Healthcare -2.1% recommendations will be in the best interest of all investors.
Financials -3.1%
Consumer Discretionary -3.1%
Real Estate -3.3%
Information Technology -3.4%
Energy -4.1%
-5% -4% -3% -2% -1% 0%

Sources: Bloomberg, Factset. Total Returns from the period of

5/19/2025 to 5/23/2025. †Bloomberg Barclays Indices. ††Spot price
returns. All data as of the 5/23/2025 close. Data would differ if a
different time period was displayed. Short-term performance shown
to illustrate more recent trend. Past performance is no guarantee
of future results.

7 of 8 May 27, 2025 – Capital Market Outlook RETURN TO FIRST PAGE

Index Definitions
Securities indexes assume reinvestment of all distributions and interest payments. Indexes are unmanaged and do not take into account fees or expenses. It is not possible to invest
directly in an index. Indexes are all based in U.S. dollars.
S&P 500 Index is a market-capitalization-weighted index that is widely regarded as the best single gauge of large-cap U.S. equities. The index includes 500 leading companies and covers
approximately 80% of available market capitalization.
Institute for Supply Management (ISM) manufacturing index is a monthly economic indicator that measures the health of the U.S. manufacturing sector. It's based on a survey of purchasing
and supply executives in manufacturing firms. The index is a composite measure that reflects trends in key areas like new orders, production, employment, supplier deliveries, and inventories.
Consumer price index measures change over time in the prices paid by consumers for a representative basket of goods and services.

Important Disclosures
Investing involves risk, including the possible loss of principal. Past performance is no guarantee of future results.
This material does not take into account a client’s particular investment objectives, financial situations, or needs and is not intended as a recommendation, offer, or solicitation for the purchase or
sale of any security or investment strategy. Merrill offers a broad range of brokerage, investment advisory and other services. There are important differences between brokerage and investment
advisory services, including the type of advice and assistance provided, the fees charged, and the rights and obligations of the parties. It is important to understand the differences, particularly when
determining which service or services to select. For more information about these services and their differences, speak with your Merrill financial advisor.
Bank of America, Merrill, their affiliates and advisors do not provide legal, tax or accounting advice. Clients should consult their legal and/or tax advisors before making any financial decisions.
This information should not be construed as investment advice and is subject to change. It is provided for informational purposes only and is not intended to be either a specific offer by Bank of
America, Merrill or any affiliate to sell or provide, or a specific invitation for a consumer to apply for, any particular retail financial product or service that may be available.
The Chief Investment Office (“CIO”) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions
oversight and data analytics. CIO viewpoints are developed for Bank of America Private Bank, a division of Bank of America, N.A., (“Bank of America”) and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (“MLPF&S” or “Merrill”), a registered broker-dealer, registered investment adviser and a wholly owned subsidiary of Bank of America Corporation ("BofA Corp.").
The Global Wealth & Investment Management Investment Strategy Committee (“GWIM ISC”) is responsible for developing and coordinating recommendations for short-term and long-term
investment strategy and market views encompassing markets, economic indicators, asset classes and other market-related projections affecting GWIM.
BofA Global Research is research produced by BofA Securities, Inc. (“BofAS”) and/or one or more of its affiliates. BofAS is a registered broker-dealer, Member SIPC and wholly owned subsidiary of
Bank of America Corporation.
All recommendations must be considered in the context of an individual investor’s goals, time horizon, liquidity needs and risk tolerance. Not all recommendations will be in the best interest of all
investors.
Asset allocation, diversification and rebalancing do not ensure a profit or protect against loss in declining markets.
Dividend payments are not guaranteed, and are paid only when declared by an issuer’s board of directors. The amount of a dividend payment, if any, can vary over time.
Investments have varying degrees of risk. Some of the risks involved with equity securities include the possibility that the value of the stocks may fluctuate in response to events specific to the
companies or markets, as well as economic, political or social events in the U.S. or abroad. Small cap and mid cap companies pose special risks, including possible illiquidity and greater price volatility
than funds consisting of larger, more established companies. Investing in fixed-income securities may involve certain risks, including the credit quality of individual issuers, possible prepayments,
market or economic developments and yields and share price fluctuations due to changes in interest rates. When interest rates go up, bond prices typically drop, and vice versa. Investments in high-
yield bonds (sometimes referred to as “junk bonds”) offer the potential for high current income and attractive total return, but involves certain risks. Changes in economic conditions or other
circumstances may adversely affect a junk bond issuer’s ability to make principal and interest payments. Income from investing in municipal bonds is generally exempt from Federal and state taxes
for residents of the issuing state. While the interest income is tax-exempt, any capital gains distributed are taxable to the investor. Income for some investors may be subject to the Federal
Alternative Minimum Tax (AMT). Treasury bills are less volatile than longer-term fixed income securities and are guaranteed as to timely payment of principal and interest by the U.S. government.
Bonds are subject to interest rate, inflation and credit risks. Investments in foreign securities (including ADRs) involve special risks, including foreign currency risk and the possibility of substantial
volatility due to adverse political, economic or other developments. These risks are magnified for investments made in emerging markets. Investments in a certain industry or sector may pose
additional risk due to lack of diversification and sector concentration. There are special risks associated with an investment in commodities including market price fluctuations, regulatory changes,
interest rate changes, credit risk, economic changes and the impact of adverse political or financial factors.
Investments in Infrastructure Assets will be subject to risks incidental to owning and operating infrastructure projects, including risks associated with the general economic climate, geographic or
market concentration, government regulations and fluctuations in interest rates. The industries targeted for investment may be highly regulated by governmental agencies. Such regulations may
impact an investor’s ability to acquire, dispose of and/or manage investments.
Alternative Investments are speculative and involve a high degree of risk.
Alternative investments are intended for qualified investors only. Alternative Investments such as derivatives, hedge funds, private equity funds, and funds of funds can result in higher return
potential but also higher loss potential. Changes in economic conditions or other circumstances may adversely affect your investments. Before you invest in alternative investments, you should
consider your overall financial situation, how much money you have to invest, your need for liquidity and your tolerance for risk.
Nonfinancial assets, such as closely-held businesses, real estate, fine art, oil, gas and mineral properties, and timber, farm and ranch land, are complex in nature and involve risks including total loss
of value. Special risk considerations include natural events (for example, earthquakes or fires), complex tax considerations, and lack of liquidity. Nonfinancial assets are not in the best interest of all
investors. Always consult with your independent attorney, tax advisor, investment manager, and insurance agent for final recommendations and before changing or implementing any financial, tax,
or estate planning strategy.
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