Macro and micro: a selective risk-on, with quality first
Inflation re-accelerated while unemployment drifted up and the Fed cut 25 bps. That mix argues for selective risk-on with quality and cash-flow resilience.
Headline U.S. inflation re-accelerated to 2.9% YoY in August while unemployment has drifted up to ~4.3%, and the Fed just cut 25 bps to a 4.00%–4.25% funds target, signaling an easing bias into year-end even as near-term price pressures stay sticky; that mix (cooling labor, still-firm core) argues for selective risk-on with quality and cash-flow resilience.
Next steps
- Stress-test portfolios for a 3.5%–3.75% policy rate path in 2025, then pivot assumptions to 3.25%–3.5% in 2026.
- Favor sectors with pricing power and secular demand (AI infrastructure, power grid, defense) while trimming rate-sensitive cyclicals.
- Use credit where spreads remain near tights only for issuers with clear deleveraging visibility.
Informational content only. Not investment advice.