High-Quality Fixed Income – Overweight duration
As expected, the Federal Reserve held rates steady at their meeting last week. Rates currently have a 95% likelihood of staying flat at the January 31st FOMC meeting and a nearly 100% chance of being down by the June 12th FOMC meeting according to the CME's FedWatch tool. This signals a high likelihood that short-term rates will be flat to down over the next six months. As such, longer-duration assets are becoming more attractive. The Fed announced they will likely cut rates three times this year at 1/4% each.
High Yield Fixed Income – Overweight credit
US Equities – Underweight, tilt toward value
International Developed Equities – Overweight, tilt toward Japan
Emerging Markets (EM) – Neutral, underweight China, overweight Korea, Mexico, India
Notes: *https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/guide-to-the-markets/ page 35. 2) Ibid, pg. 45. 3) Ibid pg. 46.
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