Today's Core CPI data reinforces our view that the Fed will not be cutting interest rates further this year. While we do believe January seasonality is once again at play here, this data reaffirms that inflation will likely remain stubbornly high, above the Fed's target for the time being. Given this, and a currently resilient labor market, we think the Fed will not cut rates further any time soon.

CIO Chart of the Week: We have learned that PE isn’t a great barometer for forward return of equities. In bonds, it has become clear that a longer duration doesn’t suggest a higher forward return, but yield clearly does in today’s world.

In the meantime, inflation is steady, but above the Fed target, and more importantly for investors, because of this the ability to get income into portfolios is strong. Further, this can be accomplished by populating a portfolio with good quality assets, and not needing to extend far out the yield curve, which makes all those who invest quite content to sit and wait alongside the Fed, all while clipping a quite generous set of coupons along the way.

We believe Europe is the place for attractive investments today (if you are a lender), offering valuable diversification and return enhancement - as evidenced by 2024 returns. These often-overlooked segments are crucial for building a robust Fixed Income allocation today.

For the time being, though, we don’t see much reason to invest for significantly lower interest rates, but do see maintaining a portfolio of good quality, well curated, income with yields that easily eclipse the current rate of inflation (even if it isn’t moving lower for the short- to intermediate-term).