With a flatter curve, less duration can be more

The third quarter saw the 10-year Treasury yield surge 80 basis points, closing near 5.3%. Yields remain volatile, and it's unclear if peaks are in sight. The Fed's policy and incoming data will dictate future moves.

The yield curve is flattening, with the 2-year Treasury offering yields not much lower than longer-dated notes. This suggests the short end may offer compelling value. Investors can capture attractive yields with reduced duration risk.

At current rates, bonds are becoming attractive, especially at the short end. This offers a nimble stance, hedging against market shifts. Shorter duration can benefit from a soft landing while limiting stagflation risk. Diversified equities, particularly large-cap quality and international, are favored in a sticky soft landing. Investment-grade credit and emerging market debt also look promising. In a stagflation scenario, large-cap quality stocks with pricing power are preferred, alongside ultra-short and floating-rate fixed income.