Summary
- Yields rallied and credit outperformed as disinflation allowed the Fed to shift focus to labor market conditions and begin an easing cycle.
- The SMA underperformed its benchmark due to duration and yield curve decisions, while security selection contributed positively and sector allocation detracted.
- Inflation continued to decline, with core CPI approaching 3.00% YoY, enabling the Fed to cut rates by 50 basis points in September.
- Looking ahead, we favor assets with higher yields and shorter spread durations, while maintaining cautious optimism and readiness to adjust positioning amid evolving market conditions.
Key takeaways
Yields rallied and credit outperformed as continued disinflation allowed the U.S. Federal Reserve to shift their focus to labor market conditions and begin an easing cycle. The SMA underperformed its benchmark, the Bloomberg U.S. Aggregate Bond Index (the Index) on a gross- and

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