We could see a smoother path for munis to finish up the year.
Inflation is trending in the right direction and the Fed could be near or at the end of its rate-hiking campaign.
The rating downgrade itself will likely not have any material, sustained impact on U.S. government debt or markets broadly.
With the Fed seemingly pushing out rate cuts, markets are probably going to be volatile over the next few quarters.
Historically, core bonds, as proxied by the Bloomberg Aggregate Bond Index, have performed well during Fed rate hike pauses.
The markets are pricing in several rate cuts by the end of this year, while the Federal Reserve communicated more rate hikes.
Financial stability risks have clearly increased, which makes a prudent asset allocation plan a must.
Here are some of our lessons learned from 2022--inflation and the Federal Reserve are common themes throughout.
The significant increase in yields, especially this year, is because of changing Fed rate hike expectations.
Not all recessions are created equal.
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