The Increased Uncertainty Increasing The Appeal Of Cash-Like Allocations

Interest-rate uncertainty is rising, with ~57% odds of a 25 bps hike, alongside a selloff in long-term Treasuries. Investment-grade credit spreads have drifted back toward start-of-year levels, reducing the incremental yield available for taking additional credit risk. Net effect is a more cautious setup for IG credit and duration-sensitive positioning.