High-Quality Fixed Income – Strongly Overweight duration
At its meeting last week, the Federal Reserve did not raise rates as anticipated. Looking ahead, there is a 38% chance that rates may decrease during the March 20th FOMC meeting and a high probability of nearly 95% that they will fall by 1% or more by the September 18th FOMC meeting, as per the CME's FedWatch tool. This indicates that short-term rates are likely to remain the same or decrease in the next six months, making longer-duration assets more appealing and reducing cash yields. Our perspective is that the Fed could be influenced by the "long and variable lags" problem, which is a known issue related to the data they depend on, despite their "data dependence" policy.
High Yield Fixed Income – Overweight credit
US Equities – Underweight, tilt toward small cap and value
International Developed Equities – Overweight, tilt toward Japan
Emerging Markets (EM) – Neutral, underweight China, overweight Korea, Mexico, India
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