High-Quality Fixed Income – Overweight duration
Rate expectations have made a major shift this past week as one can see by comparing the CME FedWatch tool chart from last week with this week (below). This indicates that short-term rates are likely to come down later than expected and less than expected between now and September 18th. 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 value
International Developed Equities – Overweight, tilt toward Japan
Emerging Markets – Neutral, underweight China, overweight Korea, Mexico, India