Marvin Loh

US equities (S&P 500) are supported and likely to continue making new highs because the CapEx-driven growth theme in tech and data centers remains intact, the war has not disrupted credit availability, and the risk of further escalation is contained. The path of least resistance is higher.

Persistent above-target inflation and a hawkish half of the FOMC mean the Fed will still need to tighten before year end; the 2% inflation target is losing meaning and patience is becoming less acceptable.

Financials are showing the demand for capital, and industries that have been left behind for years are starting to percolate, benefiting from the broader capex-driven rotation.

TIPS (Treasury Inflation-Protected Securities) are a useful diversification and inflation hedge given the uncertainty around inflation and the potential for continued volatility from the Iran conflict.

"I would say equal duration makes sense... think through some of the more stable aspects of the technology sector... Gold... is no longer that safety hedge." State Street believes the "Risk On" trade is rotating, not ending. Volatility requires a safety anchor, but Gold and Swiss Franc are too expensive. Therefore, the best risk-adjusted allocation is "Equal Duration" (buying Treasuries to lock in yields as the Fed cuts) and "Stable Tech" (Cash-rich, profitable tech, not speculative AI startups). LONG TLT (Duration) and Quality Tech. AVOID Gold (XAU) as a hedge. Inflation re-accelerating (above 2%) would hurt the long duration bond trade.