Market Overview & Fed Policy - A 25 basis point rate cut by the Fed is generally beneficial for the credit market [1] - The market is uncertain about future rate cuts beyond the current one [2] - Tariffs initially caused inventory pre-buying, delaying the impact on prices, but Q3 is when the impact is expected to be felt [3][4] Credit Market Conditions - Credit spreads are currently tight [4] - High yield market quality is at its best in a decade, with the highest percentage of double B and lowest percentage of triple C ratings in over 10 years [5] - Current tight spreads are considered reasonable given the current risk levels [6] Investment Strategy & Economic Outlook - Equity market valuations require significant growth, while credit offers contractual returns, making credit potentially more attractive in a slowing economy [6][7] - Contractual returns in credit are yielding approximately 7% to 8% [7] - Signs of a slowdown include consumer spending trends, particularly among low-end consumers, and rising credit card delinquencies [8][9] - The market is heading into a credit picker's market, where the ability to select good credits will be crucial [10][11] - Core high yield and loan credit below investment grade are in a relatively good position with low leverage and good liquidity [11]