The Fed cutting rates is positive for fixed income, says Nuveen's Saira Malik

Fixed Income Strategy - The firm favors credit over duration in fixed income, particularly municipal bonds due to strong fundamentals like strong state rainy day funds and high savings rates [2][3] - The firm also likes senior loans and emerging market debt, now that some of the liberation day issues are behind us [3] - The firm prefers higher quality credit, such as senior loans, which have historically performed well during rate cut cycles [4] Economic Outlook - Employment markets are showing signs of economic slowdown [6] - The firm is focused on the government shutdown, the pace of Fed rate cuts, and third-quarter earnings as key factors influencing investment decisions [6] - The potential tail risks of the government shutdown include furlowed jobs becoming eliminated jobs, which could impact the job market [6] - The lack of economic data due to the government shutdown may hinder the Fed's decision-making process regarding rate cuts [7] Equity Market Perspective - Third-quarter earnings are expected to be strong, with consensus estimates of 88% year-over-year growth, potentially led by tech stocks [8] - US markets are trading at a premium versus history, justified by tech and AI [9] - The structural trend of artificial intelligence is alive and well and here to stay and that will drive US stocks higher [16] - AI companies are larger and more profitable this time compared to the late 90s, with corporations integrating AI into their workforce to increase productivity and revenues [15][16] - The S&P year to date is up in the mid-teens, and usually markets end higher by the time the year ends [17]