With the upcoming election, we have been traveling the country fielding questions about the markets and economy as well as which political party the markets prefer. Mountains of data and countless studies suggest that it doesn't actually matter all that much. So, what does matter? Check out our most recent article to find out.

The U.S. faces significant fiscal challenges due to current debt and deficit levels, requiring bipartisan cooperation to address effectively. History shows that fiscal responsibility can be achieved across party lines, but solutions are typically long-term rather than immediate. To achieve fiscal sustainability, spending growth must be lower than revenue growth. Our work suggests that that the U.S. can achieve to pre-COVID debt-to-GDP levels in 5-10 years, depending on economic growth rates and spending discipline. Innovation, such as AI, could potentially accelerate economic growth, similar to the IT boom of the 1990s, aiding fiscal recovery.

Yield Curve Inversion: July marks two years since the longest yield curve inversion in US history, where short-term Treasury yields exceeded long-term yields, driven by higher short-term interest rates. Economic Conditions: Stimulus measures during COVID led to increased money supply and consumer spending flexibility. Despite recent inflation and slowing spending, the economy remains resilient. Fed's Stance: The Fed remains cautious, ready to ease if needed, amidst inflation above 2% and expectations of longer-term rates around 2.3%. The paths to normalization include: gradual inflation decline prompting Fed easing (Scenario A); higher long-term rates amid inflation pressure (Scenario B); or a deep recession leading to aggressive Fed rate cuts (Scenario C). Investment Strategy: Current strategy focuses on the 5-year duration "belly" of the yield curve for optimal yield and risk management, balancing current yield against potential future rate changes.