• The Fed started its rate-cutting cycle in September 2024, but Donald Trump’s “Red Sweep” kept Treasury yields elevated, suggesting higher-for-longer interest rates and a slower pace of Fed rate cuts through 2025.
  • Yields on major fixed income categories are at above 5-year averages, offering attractive risk-return characteristics.
  • The AI boom is spurring investments in digital infrastructure, benefiting sectors like semiconductors, utilities, and robotics, with long-term gains in economy-wide productivity yet to materialize.
  • US economy is moving into the late expansion phase, where growth slows down. During this time, stable and low-risk stocks (quality and low volatility) tend to perform better, making them safer investments.