1.
Deploy cash into bonds: corporate and municipal credit quality is good, and cash rates are biased lower.
2.
Treasure curve volatility leads to a neutral-to-short duration preference, using short duration credit (IG, HY, munis) and balanced with structured products and taxable munis.
3.
Strong fundamentals create an attractive opportunity in structured credit and convertible bonds.
Policity rates have fallen: reinvestment risk still dominates portfolios.
Uncertainty about growth and inflation suggests higher and more volatile market interest rates, making duration an unreliable source of returns.
U.S. public credit quality is expected to remain very strong, supported by still-resilient economic activity.
1.
Deploy cash into bonds: corporate and municipal credit quality is good, and cash rates are biased lower.
2.
While the Q1 pace of European performance is likely not sustainable, we see tactical upside in ex-U.S. equities.
3.
Small caps are unlikely to outperform durably unless interest rates move lower while growth is resilient – unlikely this year.
We are at maximum policy uncertainty, but if earnings quality holds, equity market volatility can provide relief from high valuations and create buying opportunities.
Enthusiasm for U.S. assets is fading, while Europe’s increased defense and infrastructure spending faster interest rates cut offer potential upside.
The AI trend is here to stay, seen in investment in digital and energy infrastructure.
Consider deploying gains into high-yield corporate credit.
U.S. assets likely to outperform, supported by global dynamics and balanced ex-U.S. exposure.
AI remains a key driver, with sustained profitability expected.
Valuations and geopolitical risk support deploying cash; opportunities in U.S. large-cap value, high-quality small caps, and short-duration credit.
Early risk-on positioning has partly reversed amid geopolitical shocks; higher oil prices may delay further easing.
Diversify new equity exposure into AI-linked infrastructure/materials and high-quality small caps.
Move small caps to neutral, focusing on quality and AI/policy tailwinds.
Maintain full allocation to U.S. large caps, emphasizing earnings quality.
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Maintain an underweight to floating-rate bank loans.
Strong fundamentals support credit, though selectivity is increasingly important.
Higher yields improve income potential and provide a cushion against volatility.
Credit cycle is maturing but remains resilient; lower-quality segments are more vulnerable.
Balance short-duration credit with longer-duration infrastructure and municipals.
Keep credit duration short to manage volatility and risk.
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Favor “buy and hold” short-duration corporates to capture quality while limiting rate risk.
Deal activity has improved, but macro uncertainty and private credit stress may temper opportunities.
Allocations are growing, increasing competition for high-quality assets; selectivity is key as dispersion rises.
Use resilient mid-market private credit/equity where appropriate.
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Inflation likely to stay sticky due to structural factors.
Commodities and gold remain effective diversifiers, especially amid geopolitical risk.
Hedge inflation and geopolitical risk with gold and commodities (5–20% satellite allocation).
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Geopolitical shocks are more frequent, impacting even traditional safe-haven assets.