Core Insights - The current economic growth, driven by the AI data center boom, is not translating into significant job growth, indicating a potential disconnect between GDP growth and labor market strength [1][3] - The Federal Reserve is expected to continue cutting rates due to a weakening labor market, despite inflation being slightly above their target [4][5] - A K-shaped recovery is observed among consumers and corporations, suggesting that not all sectors are benefiting equally from the economic growth [6] Federal Reserve Expectations - The Fed's plans for rate cuts may be disrupted by labor market weaknesses, which could lead to a more stimulative approach [4][5] - A December rate cut is anticipated, with additional cuts likely in the following year as the labor market continues to weaken [5][6] - The Fed is currently above neutral and may continue to cut rates to avoid being restrictive [7] Fixed Income Market Implications - Weakening labor market conditions and potential Fed rate cuts could lead to favorable returns for fixed income investors, particularly in the front to belly of the yield curve [9][10] - The market is pricing in Fed funds forecasts that are considered too high, suggesting benefits for those taking interest rate risks [10][12] - A diversified portfolio that includes emerging markets and securitized products is recommended to capture higher yields and spread opportunities [13][24] Investment Strategies - Agency mortgage-backed securities and commercial mortgage-backed securities are highlighted as attractive sectors due to their potential for spread compression and benefits from falling interest rates [18][19] - The recently launched Eaton Vance Income Opportunities ETF (XAGG) aims to provide exposure to a barbell approach in fixed income, focusing on sectors that offer higher yields and diversification [20][21] - The ETF targets a weighted average investment grade, ensuring a balanced risk profile while seeking outperformance compared to traditional fixed income investments [22][23] Long-term Outlook - Fixed income returns are expected to be centered around current yields, with a potential for additional returns through strategic interest rate and curve positioning [26][27] - High base treasury yields are seen as a hedge against risk assets, particularly in a balanced portfolio [28][29] - Inflation is projected to stabilize around 2% in the coming year, which would benefit fixed income investors as tariff-related inflation subsides [30]

And yet on the committee, we have pushback almost. Maybe after that, Fed Governor Michael Barr had this to say. I'm concerned that we're seeing inflation still around 3%.Inflation is closer to three, that it is to two. What do you make of that argument. How persuasive is it.It's not persuasive to me, and I'll tell you why. All of the inflation excess, almost all of the inflation excess is a mirage. It's not indicative of supply demand imbalances.And so, for example, if you look at the housing market, right, ...

Bessant himself specifically said he's not attacking CBO employees, but the White House press secretary Carolyn Leit did say that CBO is a partisan and political agency. And she said that staff haven't contributed to a Republican since 2000 and have for Democrats. You know, there is some advocacy group that put out a report along those lines that I think she's leaning on is just a completely madeup number.Um, and the people who work with CBO, you know, our counterparts on the Hill, they know our staff, they ...