Bonds took a breather during the second quarter, as market participants reassessed their interest rate outlook on mixed economic data and a difficult-to-read Federal Reserve (the Fed). Mixed signals were the key to the equation as inflationary readings slowed, while remaining elevated as the services componentry proved sticky. Market expectations for Fed action started the quarter, with just one more hike priced followed by a cut in mid-September. Current market expectations call for another hike this summer with a cut expected at the December meeting. The short-end of the curve suffered with the yield on the 2-year Treasury moving from 4.03% to 4.90%, but rates were more muted out the curve with the 10-year about 35bps higher.
Read the full report below for more information on Fixed Income, Credit Spreads, The Economy, The Fed, and our Investment Strategy going into the next quarter of 2023.