Risk Assets Persist

May was defined by resilient U.S. growth, sticky inflation, and a continued repricing of rate expectations, yet risk assets stayed well supported. Credit markets held firm on strong technical demand and carry, even as valuations remained tight and dispersion widened across sectors. We continue to see opportunities in areas with attractive income and solid fundamentals, including select emerging market debt and securitized credit, while remaining more cautious on investment grade credit where spreads leave less room for error.

At the same time, higher yields and persistent inflation keep duration risk relevant, especially if price pressures prove slower to fade than expected. Security selection matters more now as late-cycle conditions increase the spread between stronger issuers and weaker ones. For investors, the backdrop still favors disciplined allocation over broad beta exposure.