12 October 2026 | Latest available: Market Update, 5 October

Bank of America’s latest market commentary maintains a constructive outlook despite inflation, rising Treasury yields and geopolitical uncertainty. Its assessment is that revised economic data and resilient corporate earnings continue to support markets, even as financing conditions become more challenging.

The key question for dealmakers is whether corporate earnings can keep pace with the cost of capital. If yields continue to rise, buyers may need to revise discount rates, lower acquisition bids or contribute more equity to transactions. Conversely, companies with robust cash generation and access to capital may find opportunities to acquire businesses facing tighter financing conditions.

Market implications

• Growth: Resilient earnings continue to support the market outlook.

• Inflation: Persistent price pressures could keep rates elevated.

• Risk: Geopolitical and policy uncertainty could increase market volatility.

M&A / deal flow implications

• Strategic acquisitions may prove more resilient than deals dependent on aggressive leverage.

• Valuation gaps could widen if sellers anchor to earlier financing conditions.

• Corporate balance-sheet strength may create opportunities for acquisitions and divestitures.

3 key takeaways

1. Bank of America remains constructive despite a more difficult macroeconomic backdrop.

2. Earnings resilience is important, but higher yields remain a threat to valuations.

3. Financing structure and price discipline will be critical to completing transactions.