Interest Rate Hikes, Volatile Bitcoin, and Commodity Buoys

Bank of America is still expecting the Federal Reserve to raise interest rates by 75 basis points this year, despite recent data showing weakness in employment, inflation, and consumer metrics. The Fed's July meeting minutes will be closely watched for any signs of a rate hike, with market expectations having declined significantly.

The bank believes small-cap stocks are most sensitive to interest-rate hikes due to their leverage and debt structures, but earnings growth, guidance, and the recovery of the manufacturing sector in the second half of the year should continue to support mid- and small-cap equities. Fundstrat notes that low-volatility periods for Bitcoin often precede significant price swings, with a median absolute price change of 30.2% over the subsequent 60 days.

UBS Group is bullish on energy, industrial metals, and gold due to geopolitical tensions in the Middle East and fundamentals supporting commodity demand.