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Stay ahead of rapidly changing markets with the latest research and commentary from Federated Hermes. Our Insights page provides thoughtfully crafted analysis designed to inform confident investment decisions.

Insightful perspectives and forward-looking market analysis

Timely market analysis

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A scenario-focused look at what’s moving markets.

First QUARTER 2026

Quarterly Update

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Featuring our latest forecasts and key capital markets trends.

May 2026

Monthly Update

A recent sampling of newsflow about artificial intelligence (AI) includes the AI spending race by tech giants, controversies over data center construction, threats to jobs, calls for US government regulation and, of course, surging AI chip demand. There are and will be winners and losers from the AI revolution; one of the obvious winners is the Republic of Korea. The South Korean equity market has been on fire of late, up 109% year-to-date and 226% for the past 12 months as June begins, strongly boosting emerging market performance. One of the reasons for this, no surprise, is the country’s exposure to the AI sector. Operating profits from South Korea’s largest semiconductor companies may be set to surge in coming years. This in turn is expected to boost corporate tax payments, income taxes and capital gains. What to do with all this money? Korea’s finance minister has said that the sudden burst of tax revenue will be partly invested for the benefit of future generations in a sovereign wealth fund. Others have different ideas for the windfall. One proposal would simply be to pay down the national debt. The expected surplus tax revenues over the next three years could cut the country’s outstanding public debt nearly in half. Others propose sharing the wealth more broadly via a “citizen dividend.” So South Korea has choices to make. Whatever path it pursues, the mere fact of the windfall will be another tangible sign of benefits flowing from AI investment.

JUNE 8, 2026

The US consumer continues to feel the heat from geopolitical conflict.

AI beneficiaries go beyond tech giants and shareholders

Our latest views on data, trends and events influencing the markets.

Capital Markets

Our outlook: AI has been vital to economic growth not only in South Korea but also in the US and other countries globally. Everybody wants to know whether the current pace of growth is sustainable and, if so, for how long. How that takes shape may, as much as any other factor, determine which economic scenario we face. If the AI economy can continue without overheating, we can expect a growth stabilization scenario. Full, risk-on acceleration would likely require a supportive macro environment in addition to booming AI investment. If the Iran war drags on and we fail to see enough disinflation from AI-induced productivity, we could see a prolonged inflation scenario. A hard landing would likely mean that central banks had sharply raised rates so as to squelch inflation. Prolonged inflation — inflation remains sticky, energy prices stay elevated, and policy easing is delayed, supporting defensive positioning. Growth stabilization — inflation moderates gradually, growth remains positive, and markets broaden beyond megacaps, supporting balanced portfolios. Risk-on re-acceleration — geopolitical tensions ease quickly, inflation expectations fall, and markets price ongoing rate cuts, potentially supporting risk assets. Hard landing — growth deteriorates and financial conditions tighten, creating a risk-off environment, supporting liquidity. For more on our scenario-led outlooks read our monthly and quarterly Capital Markets publications.

Source: Federal Reserve Bank, St. Louis, 4/8/2026