Gov Sovereigns/Treasurys

Our Portfolio Allocation Summary for August 2025.

Economic activity and hiring cooled significantly in the first half of the year. The most important question for investors is whether this signals an imminent increase in labor market slack.

MacroQuant is recommending that equity investors keep their finger near the eject button but avoid pressing it for now. The model is warming up to the dollar again and sees scope for oil prices to rise.

The Fed will keep rates on hold until the unemployment rate forces its hand.

The Bank of Canada continues to hold its policy rate amid trade uncertainty and shows little concern about the potential economic damage from tariffs. We judge the risks differently and view a bet on more rate cuts this year as attractive.

We will only move to a fully defensive stance if the “whites of the recession’s eyes” appear. So far, they have not. We will be increasingly looking to our MacroQuant model for guidance on when the next turning point in markets may come.

Investors should anticipate above average Treasury returns during the next 12 months, and curve steepeners will continue to profit.