Key Takeaways
- Middle East news should continue to be in the headlines, but our base case still sees ‘good’ growth and 'above-target’ inflation.
- The September rate hike underscored that the Fed’s primary mission is focused on the inflation side of its dual mandate. Any potential future rate hikes will be geared towards reversing last year’s rate cuts.
- Despite the recent rate hike, the forces pushing the Treasury 10-year yield higher remain in place, keeping rates and volatility higher heading into year-end.
- We believe the bond portfolio decision-making process could benefit from limiting duration and volatility risk by taking a barbell approach anchored by zero-duration strategies.
- Many investors are concerned about the headwinds from rising rates, but history and today's fundamentals suggest current levels can be digested by markets.
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