Authors
Evan Brown Ryan Primmer Luke Kawa

Highlights

  • We believe that the spread between two and 10-year Treasury bond yields is not a very effective tool for near-term economic forecasting or tactical asset allocation decisions.
  • Though growth is decelerating, economic fundamentals remain robust, and recession risk is low, in our view.
  • We have closed our short position on government bonds following the sharp rise in yields linked to aggressive tightening from the Federal Reserve.
  • On global equities, we are neutral at the index level and favor cyclicals that are overly discounting recession risk or have structural upside, as well as higher-quality and defensive pockets of the market where profit growth should remain resilient.

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The yield curve

Macroeconomic themes and tactical asset allocation opportunities

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