CHIEF INVESTMENT OFFICE

Capital Market Outlook

September 11, 2023

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

IN THIS ISSUE MACRO STRATEGY 

Macro Strategy—Risk Monitor: A Clash of Outlooks: Our “on guard” portfolio posture Rodrigo C. Serrano, CFA®
reflects a balanced to negative tilt in the Chief Investment Office (CIO) Risk Monitor, a Director and Senior Investment Strategy Analyst
dynamic running tally of the tailwinds, headwinds and risks facing the investment outlook.
MARKET VIEW 
The debates have been heated: Is a soft or hard economic landing in store? Will policy interest Emily Avioli
rates in general remain higher for longer or will broadening disinflation raise anticipation for Assistant Vice President and Investment Strategist
cuts? Will China embrace a robust stimulus policy? In this report, we cover factors that may
help provide clarity on these pivotal debates and constitute potential catalysts on our radar. THOUGHT OF THE WEEK 
Market View—When Will Bad News Be Bad News Again?: Lately investors have been Irene L. Peters, CFA®
responding positively to data that suggests the economy is weakening. Central to this “bad Director and Senior Macro Strategy Analyst
news is good news” dynamic is a belief that a softening economy will lead to cooling
inflation, which will be met by easier central bank policy and lower interest rates MARKETS IN REVIEW 

In our view, this trend won’t last forever. We see a number of scenarios that could develop Data as of 9/11/2023,
over the next several months that may alter the way economic data is interpreted, and subject to change
potentially adding to market choppiness throughout the balance of the year.
Thought of the Week—Consumer Spending Running Out Of Fuel: Stronger-than- Portfolio Considerations
expected consumer spending in July following June’s solid performance has helped boost
2023 U.S. economic growth estimates and diminished recession expectations for this year. We expect a slight updraft in
September, primarily due to
Several factors suggest that vigilance over the sustainability of this consumer spending investment flows coming back into
rebound and its future support for the economy may be warranted, however. Employment the market as inflation gauges
growth has sharply moderated in recent months, and the Federal Reserve (Fed) is still continue to move lower and bond
trying to restrain the economy, including wage growth, in order to further reduce inflation. yields back off a bit. In addition, we
Along with a rock-bottom saving rate, this suggests that the consumer-spending expect corporate earnings for Q3 to
wherewithal is poised to diminish, reducing the sector’s critical contribution to economic come in with a small beat again.
growth.
Longer-term investors should
consider using excess cash on a dollar
cost averaging approach into Equities
over the last quarter of the year.
Given both tailwinds and headwinds,
we continue to maintain a balanced
tactical portfolio strategy view and a
high-quality bias in the near term.

Chartered Financial Analyst® and CFA® are registered trademarks owned by CFA Institute.

Trust and fiduciary services are provided by Bank of America, N.A., Member FDIC and a wholly owned subsidiary of
Bank of America Corporation (“BofA Corp.”).
Investment products:
Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value
Please see last page for important disclosure information. 5935974 9/2023
MACRO STRATEGY
Risk Monitor: A Clash of Outlooks
Rodrigo C. Serrano, CFA®, Director and Senior Investment Strategy Analyst
Time in the market, not market timing—this fundamental view of the CIO stresses a long- Investment Implications
term perspective. Moreover, goals-based investing includes a careful consideration of an
investor’s time horizon and risk tolerance. Combined, this ethos is reflected in the Recently, we ascribed
strategic asset allocation, which should prevail when constructing comprehensive crosscurrents filtering through the
investment portfolios. Tactical shifts supplement this bedrock allocation. Currently, they global economy taking place within
lean toward a more balanced to defensive positioning, reflective of elevated global a collision of oceans or
uncertainty and a negative tilt in the CIO Risk Monitor. macroeconomic and geopolitical
regimes. The journey through this
Waiting For Gadot(s) Waiting for an unrealized U.S. recession has proved painful for transition is likely to produce
investors expecting one. Bolstered by excess savings and a robust labor market, personal clashes of competing outlooks and
consumption for July rose at its fastest pace since January, with a rebound in goods-related narratives. This uncertainty
spending broadening the advance. These and other results have propelled the Atlanta Fed’s strengthens the case for
GDPNow tracker, a real-time estimate of economic growth, to over 5% for Q3. Confirming maintaining a well-balanced and
the optimistic outlook has been a shrinking of the spread between U.S. Treasury yields to
diversified portfolio. Later this
those of the High Yield and Investment-grade bond markets over the past six months.
year, longer-term investors may
Meantime, a supportive growth-oriented policy framework consists of the Bipartisan
consider using excess cash on a
Infrastructure Law, passed in 2021, the CHIPS and Science Act of 2022 and the Inflation
dollar-cost averaging approach
Reduction Act. These initiatives complement the rising security and economic costs of far-
into Equities if a sustainable
flung transnational supply chains, fostering a reshoring drive by businesses, in our view.
rebound in corporate earnings
These forces may limit downside for the Manufacturing sector, which is troughing, according
becomes apparent.
to the Institute for Supply Management. A recovery in the sector may become an upside
catalyst, broadening out the Equity market rally, with Value-cyclical sectors playing catch up.
It could also fortify the recent upward drift in 12-month forward earnings estimates seen for
the S&P 500 and the Russell 2000 Small-cap Index (Exhibit 1A).

In China, however, the wait has been for a robust stimulus policy to reverse, among other
drags, weakness in the Real Estate sector, which constitutes roughly 30% of total
economic output, according to news reports. As a top export destination for nearly 40
economies, according to the International Monetary Fund, more signs of a prolonged
slowdown in China may agitate global risk markets, as roughly a third of global growth this
year was expected from there. Officials, worried over the fallout from a weakening
economy, have begun to take fiscal, monetary and regulatory actions. Their effectiveness
may act as a catalyst across a wide range of financial assets, including the U.S. dollar,
international equity markets and commodities.

Soft Versus Hard Landing Indeed, anticipation is building for higher oil prices, while the
price of the Bloomberg Commodity Index is showing potential for a reversal to the upside.
Aside from the Energy sector, other cyclically Value-oriented Equity segments and global
regions may benefit if this catalyst materializes. This evolution may increasingly favor a
global soft-landing scenario by lending support to current significant pockets of strength.
For example, in Japan, Q2 real gross domestic product (GDP) grew at a 5% annual pace.
India recorded its quickest rate of expansion in a year at 7.8% during the same time
frame.

Meanwhile, in the U.S., drivers of underlying inflation are set to cool further, with the
shelter component, which makes up over 40% of the core basket of the Consumer Price
Index (CPI), set to detract from price pressures by the middle of next year. 1 Moreover,
alongside the continued business adoption of artificial intelligence, helping boost
productivity, job creation in August cooled, while the prime-age labor force participation
rate rose to its highest level since May 2002. Expanding supply is helping rebalance the
labor market and may raise the potential for less restrictive monetary policy.

1
Inflation and Housing Costs are Set to Turn a Corner, The Wall Street Journal, August 10, 2023.

2 of 8 September 11, 2023 – Capital Market Outlook RETURN TO FIRST PAGE

Though this scenario may contribute positively to the valuation of the equity market, a
drop-off of pandemic-related fiscal support may yet present headwinds that surprise
markets. A lapsing of federal child-care support could challenge the uptrend in the female
prime-age labor force participation rate, which hit an all-time high in June. Concurrently, a
partial resumption of student loan debt payments could also hit disposable income amid a
low personal savings rate. A report by the San Francisco Fed argues that excess savings
are running out. In Washington, among other developments, budget negotiations are set to
begin to prevent a government shutdown due at month’s end. Investor confidence may
also be affected by an unexpected souring of relations between the U.S. and China,
especially if it significantly effects the Technology sector.

Lower Versus Higher Interest Rates The Fed’s tightened monetary policy has factored
in containing longer-run U.S. inflation expectations, which have generally remained stable.
Through 2024, markets expect cuts to the policy interest rate by nearly 1% from today’s
level. Globally, central banks that led the way toward raising interest rates, such as Brazil
and Chile, are now lowering them. Some analysts believe that a deflationary pulse from
China may prove a silver lining. For example, it may help facilitate the European Central
Bank’s battle against inflation and reinforce market expectations for it to also cut its
benchmark rate multiple times next year.

Yet compared to the U.S., the bar for loosening policy seems to be higher in Europe, where
market-based inflation expectations for the euro area are near the highest in over a
decade, the labor force participation rate stands at an all-time high, and the
unemployment rate remains at a record low. At risk of jeopardizing economic growth by
tightening monetary policy, the Bank of Japan (BoJ) faces a similar dilemma. Japanese
inflation excluding food and energy is at its highest level since 1992, while the yen has
weakened. This has stung domestic consumption, which has lagged growth in tourism and
exports, recent drivers of growth. Amid geopolitically disrupted and tightening
commodities markets, these pressures may trigger a fresh leg higher in the yields of these
notable sovereign bond markets, with spillover risks to other financial markets and
economies in general (Exhibit 1B).

Exhibit 1: We View The Path Of Earnings And Interest Rates As Fundamental For The Outlook.
1A) After falling, rising profit forecasts are also helping improve valuations. 1B) A breakout for yields in some notable sovereign bond markets may
un-anchor others .
240 115 Australia (Left Scale) U.S. (Left Scale)
5.0 3.5
Profit Estimates, 12 months Forward ($/share)

Profit Estimates, 12 months Forward ($/share)

S&P 500 (Left Scale) Germany (Right Scale) Japan (Right Scale)
4.5 3.0
Russell 2000 (Right Scale) Resistance?
235 105 4.0 2.5
3.5 2.0

10-year yields, (%)

10-year yields, (%)

3.0 1.5
230 95 2.5 Yield Curve Control 1.0
Reference rate
2.0 0.5
1.5 0.0
225 85
1.0 -0.5
0.5 -1.0
220 75 0.0 -1.5
Aug-22

Aug-23
Sep-22

Dec-22
Jan-23
Nov-22
Jul-22

Feb-23
Jun-22

Oct-22

Apr-23

Jul-23
Mar-23

May-23
Jun-23

Jan-22

Jan-23
Jan-20

Jan-21

Apr-22
Jul-22

Apr-23
Jul-23
Oct-23
Apr-20
Jul-20

Apr-21
Jul-21
Oct-20

Oct-21

Oct-22

Source: Bloomberg. Data as of September 8, 2023. Past performance is no guarantee for future results. Please refer to index definitions at the end of this report. It is not possible to invest
directly in an index. Estimates are as of the date of the indicated and are subject to change without notice. Economic or financial forecasts are inherently limited and should not be relied on as an
indicator of future investment performance.

3 of 8 September 11, 2023 – Capital Market Outlook RETURN TO FIRST PAGE

MARKET VIEW
When will Bad News be Bad News Again?
Emily Avioli, Assistant Vice President and Investment Strategist
As of late, weakening economic data has, somewhat counterintuitively, been seen as a
Investment Implications
mostly welcome signal for Equities. Central to this dynamic is a belief that a softening
economy will lead to cooling inflation, which will be met by easier central bank policy and Our base case is for a choppy,
lower interest rates. grind-it-out market environment to
persist for the remainder of the
A recent example: The last week of August, Job Openings and Labor Turnover Survey year. Against this backdrop, from
(JOLTS) data showed that U.S. job openings fell in July by more than anticipated to a an investment perspective, we
more-than-two-year low. The number of available positions decreased to 8.8 million, down continue to favor a disciplined
from 9.2 million the month prior, marking the sixth decline in the last seven months. The approach that emphasizes
JOLTS data preceded the Bureau of Labor Statistics Employment Situation report, which diversification across asset
showed that the unemployment rate rose to 3.8%, and average hourly earnings rose just
classes.
0.2% month-over-month (MoM), marking the smallest increase since February 2022.
Separate data showed that consumer confidence surprised to the downside in August,
reversing course after back-to-back gains in June and July.

These reports could have been interpreted as a worrisome sign that the economy’s two
strongest pillars—the labor market and the consumer—are starting to show some cracks.
But investors’ reaction to the news was largely positive. The S&P 500 rallied 2.5%, logging
its biggest weekly total return since June, and the policy-sensitive 2-year treasury yield
tumbled. While no one data point can be credited for moving the market, generally this is
part of a larger pattern in which stocks have been defying a sluggish message from
economic indicators (Exhibit 2). But in our view, the “bad news is good news” trend won’t
last forever. We see a number of scenarios that could develop over the next several
months that may potentially cause it to reverse.

Exhibit 2: There Is A Growing Divergence Between Equities and Leading Economic

Indicators.
% Conference Board U.S. Leading Index (Year/Year % Change, Left Scale) %
15 S&P 500 Index (Year/Year % Change, Right Scale) 60
10 40
5 20
0 0
-5 -20
-10 -40
-15 -60
-20 -80
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023

Source: Bloomberg. Data as of September 6, 2023. Past performance is no guarantee of future results. Please refer to index
definitions at the end of this report. It is not possible to invest directly in an index.
Scenario 1: Inflation moves closer to the Fed’s target—For now, investors are still
laser focused on the outlook for inflation. Fortunately, data suggests that its pace appears
to be slowing. The CPI rose by a seasonally adjusted 0.2% in July from the previous month
and rose 3.2% on a year-over-year (YoY) basis. Core CPI, which excludes volatile
components like food and energy, rose 0.2% from the month prior, marking the smallest
back-to-back gain in more than two years. However, investors may need to see more
evidence of moderation to be convinced that inflation will help make a sustainable move
lower toward the Fed’s 2% target. Once inflation concerns abate, data that suggests that
the economy is losing momentum might be met with less investor enthusiasm.

4 of 8 September 11, 2023 – Capital Market Outlook RETURN TO FIRST PAGE

Scenario 2: Path of interest rates becomes clearer—Higher interest rates are
typically seen as unfavorable for risk assets like Equities, as they make companies’ future
profits less valuable in today’s dollars. As such, recent data that has suggested that rates
could move lower has generally been viewed as a positive. While consensus expects that
the Fed is approaching the end of its hiking cycle, there is still a possibility that rates
move higher or stay elevated. Investors are pricing in about a 45% chance of an additional
25 basis point rate hike at the November Federal Open Market Committee (FOMC)
meeting, which is consistent with BofA Global Research’s forecast for a terminal rate of
5.50% to 5.75%. Further, central bank officials have reiterated the risk that rates could be
“higher-for-longer,” repeatedly doubling down on their data-dependent stance.
Commentary from Fed Chair Jerome Powell at the September FOMC meeting will be
closely monitored for more clarity on the next steps for monetary policy. Once the fed
funds rate definitively reaches its cyclical peak, and investors become more confident that
policy is set to ease, concerns about higher interest rates could start to fade into the rear
view and investors could begin to interpret sluggish economic data as unfavorable again.

Scenario 3: Focus shifts to earnings—While it’s true that a weaker economy can lead
to less inflation and lower rates, it also tends to result in less consumer demand and lower
profits for companies. As worries about the former begin to subside, more emphasis could
be placed on the prospect for weaker earnings. From this perspective, the backdrop has
already started to deteriorate amid slowing economic momentum. While results have been
largely better than expected, S&P 500 earnings per share (EPS) still fell by -4.0% in Q2,
marking the third straight quarter of YoY declines and moving the index further into a so-
called “earnings recession”, according to FactSet. Profit margins also continued their
steady decline in Q2, falling to 11.6% from 12.2% a year ago, and could remain under
pressure as company pricing power fades. In our view, the profit cycle has not bottomed
yet, and analyst’s estimates are still too high for 2023 and 2024. Once the focus shifts to
weaker fundamentals for earnings, investors could start to cheer positive economic news.

Scenario 4: Recession risks pick up—There’s mounting optimism that the U.S. could
avoid a severe economic downturn, with a growing number of analysts scrapping their
recession forecasts in favor of a soft landing. However, downside risks remain as the
lagged effects of tighter monetary policy filter through the economy. The potential for
tighter lending standards, deeper yield curve inversions, and widening credit spreads could
all lead to lower projections for economic growth, which is already expected to fall below
trend in 2024. If expectations for the economic outlook worsen and if the concern of a
recession begins to loom larger, any additional bad news about the economy will likely
start to translate to bad news for risk assets.

Conclusion
It’s difficult to pinpoint exactly when the “bad news is good news” dynamic will fade, but
we see the potential for a few scenarios to develop that could alter the way economic
data is interpreted over the next several months. In our view, this potential shift is one of
many factors that could add to market choppiness throughout the balance of the year.

5 of 8 September 11, 2023 – Capital Market Outlook RETURN TO FIRST PAGE

THOUGHT OF THE WEEK
Consumer Spending Running Out Of Fuel
Irene L. Peters, CFA®, Director and Senior Macro Strategy Analyst
No doubt helped by strong government spending, especially on incentives aimed at
boosting on-shore green energy and high technology U.S. manufacturing capabilities,
business investment surprised to the upside in Q2, helping sustain economic growth and Investment Implications
causing a reexamination of recession expectations otherwise suggested by various
indicators that, in the past, offered reliable early warning of impending economic and Given diminishing tailwinds to
financial market trouble. The eye-popping Bureau of Economic Analysis consumer growth and intensifying headwinds
spending report for July further weakened the case for a recession this year, as real as the full effect of the Fed rate
consumer spending appears on track for a big reacceleration from 1.7% annualized growth hikes materializes, we remain
in Q2 to about 3.5% in Q3, even assuming flat spending in August and September. This neutral Equities, with an
would provide a strong contribution to the economy into the second half, sharply reducing overweight on the U.S. market
the likelihood of recession. Overall, U.S. GDP growth estimates for 2023 have been revised given our high-quality bias.
up significantly, boosting investor risk appetite and suppressing equity market volatility.

Although growth has surprised to the upside, employment has remained strong, financial
conditions have seemingly eased, and risks of a recession this year have greatly
diminished, there are reasons to remain vigilant. In particular, it remains to be seen
whether the burst of support coming from the consumer sector, especially important given
its disproportionate 70% share of the U.S. economy, is sustainable.

Indeed, in the face of anemic disposable personal income gains in June and July,
consumers greatly reduced saving out of income to boost already elevated spending. With
the saving rate down from 4.3% in June to just 3.5% in July, their ability to keep spending
in excess of (softening) income growth has diminished. At the same time, pandemic-
related “excess savings” have mostly been depleted, the cost of living is up about 20%
over the past four years, government transfer payments have declined, student-loan debt
payments have restarted, and banks are pulling back on consumer lending—all factors that
no doubt were behind the rush into the labor force reported for August.

If sustained, as seems likely in this context, increased labor supply would, however, occur
just as the U.S. jobs-creation engine shifted into lower gear. Employment growth
estimates have been revised down every month this year, and average monthly payroll
growth has weakened from 236,000 over the past eight months to just about 150,000
over the past three months, according to the Bureau of Labor Statistics. What’s more, job
openings and temporary hiring have dropped significantly, consistent with soft payroll
growth ahead.

While some have interpreted the drop in temporary employment as a potentially positive
sign of rising demand for full-time jobs, its YoY decline has been corroborated by the drop
in the Conference Board survey of consumer perceptions about jobs availability, refuting
this argument and suggesting that the labor market cooling is real and meaningful. That
this occurs just when more people need to work again for a living is not encouraging, as it
implies rising unemployment and weakening consumer spending power ahead. The August
unemployment rate increase from 3.5% to 3.8% may seem benign, especially as it was
“for the right reason” (i.e., because of a larger-than-expected increase in the labor force),
but the general dynamic in the economy suggests it may continue.

6 of 8 September 11, 2023 – Capital Market Outlook RETURN TO FIRST PAGE

MARKETS IN REVIEW

Equities
Total Return in USD (%) Economic Forecasts (as of 9/8/2023)
Current WTD MTD YTD 2022A Q1 2023A Q2 2023A Q3 2023E Q4 2023E 2023E
DJIA 34,576.59 -0.7 -0.4 6.0 Real global GDP (% y/y annualized) 3.6 - - - - 3.0
NASDAQ 13,761.53 -1.9 -1.9 32.3 Real U.S. GDP (% q/q annualized) 2.1 2.0 2.1 2.0 1.5 2.1
S&P 500 4,457.49 -1.3 -1.1 17.4 CPI inflation (% y/y) 8.0 5.8 4.0 3.5 3.3 4.1
S&P 400 Mid Cap 2,574.53 -3.5 -2.7 7.1 Core CPI inflation (% y/y) 6.1 5.6 5.2 4.3 3.8 4.7
Russell 2000 1,851.55 -3.6 -2.5 6.2 Unemployment rate (%) 3.6 3.5 3.5 3.7 3.8 3.6
MSCI World 2,948.81 -1.3 -1.2 14.7 Fed funds rate, end period (%) 4.33 4.83 5.08 5.38 5.63 5.63
MSCI EAFE 2,074.02 -1.4 -1.6 9.1
MSCI Emerging Markets 973.86 -1.2 -0.6 3.9 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
Fixed Income† year and can express upside/downside to these forecasts. Historical data is sourced from Bloomberg, FactSet, and
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.
Corporate & Government 5.06 -0.29 -0.77 0.75 Sources: BofA Global Research; GWIM ISC as of September 8, 2023.
Agencies 5.07 -0.13 -0.30 1.73
Municipals 3.84 -0.23 -0.25 1.34
U.S. Investment Grade Credit 5.11 -0.30 -0.77 0.59 Asset Class Weightings (as of 9/5/2023) CIO Equity Sector Views
International 5.75 -0.25 -0.83 1.90 CIO View CIO View
High Yield 8.53 -0.31 -0.30 6.81 Asset Class Underweight Neutral Overweight Sector Underweight Neutral Overweight
90 Day Yield 5.44 5.41 5.44 4.34
neutral yellow

Equities
Over weight green

    Healthcare    
2 Year Yield 4.99 4.88 4.86 4.43
Slight over weight green

U.S. Large Cap

Slight over weight green

    Energy    
10 Year Yield 4.26 4.18 4.11 3.87 U.S. Mid Cap
Slight over weight green

   
Slight over weight green

30 Year Yield 4.34 4.29 4.21 3.96 neutral yellow

Utilities    
U.S. Small-cap    
Slight underweig ht orange
Consumer Neutral yellow

   
International Developed     Staples
Commodities & Currencies Emerging Markets
Neutral yellow

    Information Neutral yellow

   
Total Return in USD (%) Neutral yellow

Technology
Fixed Income    
Commodities Current WTD MTD YTD
U.S. Investment- slight over weight green
Communication Neutral yellow

   
Bloomberg Commodity 239.49 -0.5 0.2 -2.6    
grade Taxable Services
WTI Crude $/Barrel†† 87.51 2.3 4.6 9.0 International
neutral yellow

    Industrials
Neutral yellow

   
Gold Spot $/Ounce†† 1,919.08 -1.1 -1.1 5.2 Slight underweig ht orange

Global High Yield Taxable

Neutral yellow

    Financials    
Total Return in USD (%) U.S. Investment Grade Slight underweig ht orange

    Materials
slight underweig ht orange

   
Prior Prior 2022 Tax Exempt slight underweig ht orange

U.S. High Yield Tax Exempt

Slight underweig ht orange

Real Estate    
Currencies Current Week End Month End Year End    

EUR/USD 1.07 1.08 1.08 1.07 Alternative Investments* Consumer Underweight red

   
Discretionary
USD/JPY 147.83 146.22 145.54 131.12 Hedge Funds
USD/CNH 7.36 7.27 7.28 6.92 Private Equity
Real Estate
S&P Sector Returns Tangible Assets /
Commodities
Energy 1.5% Cash
Utilities 0.9% *Many products that pursue Alternative Investment strategies, specifically Private Equity and Hedge Funds, are available
Communication Services 0.0% only to qualified investors. CIO asset class views are relative to the CIO Strategic Asset Allocation (SAA) of a multi-asset
Consumer Staples -0.5% portfolio. Source: Chief Investment Office as of September 5, 2023. All sector and asset allocation recommendations
Consumer Discretionary -0.5% must be considered in the context of an individual investor’s goals, time horizon, liquidity needs and risk tolerance. Not all
Real Estate -1.0% recommendations will be in the best interest of all investors.
Financials -1.0%
Healthcare -1.1%
Information Technology -2.3%
Materials -2.4%
Industrials -2.9%
-4% -3% -2% -1% 0% 1% 2%

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

9/1/2023 to 9/8/2023. †Bloomberg Barclays Indices. ††Spot price
returns. All data as of the 9/8/2023 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 September 11, 2023 – 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 stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States.
Russell 2000/Small-cap Index measures the performance of about 2,000 of the smallest publicly traded companies in the U.S.
Bloomberg Commodity Index is a broadly diversified commodity price index distributed by Bloomberg Index Services Limited.
Consumer Price Index (CPI) measures the overall change in consumer prices based on a representative basket of goods and services over time.
Conference Board U.S. Leading Index provides an early indication of significant turning points in the business cycle and where the economy is heading in the near term.

Important Disclosures
Investing involves risk, including the possible loss of principal. Past performance is no guarantee of future results.
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, rebalancing and dollar cost averaging do not ensure a profit or protect against loss in declining markets.
Keep in mind that dollar cost averaging cannot guarantee a profit or prevent a loss. Since such an investment plan involves continual investment in securities regardless of fluctuating price levels,
you should consider your willingness to continue purchasing during periods of high or low price levels.
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. Stocks of small-cap and mid-cap companies pose special risks, including possible illiquidity and greater
price volatility than stocks 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. Bonds
are subject to interest rate, inflation and credit risks. 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. 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. 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.
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.
© 2023 Bank of America Corporation. All rights reserved.

8 of 8 September 11, 2023 – Capital Market Outlook RETURN TO FIRST PAGE