Extending Bond Duration in Response to Interest Rate Cuts | CarbonLITE - 9/24/24

Portfolio Adjustments

Conservative

• Current Stock Exposure is 33.5%

• Benchmark Stock Exposure is 30%

• Sell All: JP Morgan Ultra-Short Income ETF (JPST)

• Added to Current Fund: Hartford Strategic Income (HSNIX)

Moderate

• No trades

• Current stock exposure is 69.5%

• Benchmark stock exposure is 60%

Aggressive

• No Trades

• Current Stock Exposure is 95%

• Benchmark Stock Exposure is 85%

Last week, the Federal Reserve lowered interest rates by 50 basis points (0.5%), and we see this as just the start of their rate-cutting cycle.  As indicated by the data in the charts below, this reduction may be the first of several, with markets expecting additional declines in interest rates.

Source: Bloomberg, FactSet, Federal Reserve, J.P. Morgan Asset Management

In response to the Fed's decision to cut interest rates and the expectation of additional reductions, the investment committee has decided to extend the duration of our bond portfolio. One advantage of extending bond duration is that it allows investors the opportunity to secure higher yields from existing bonds before rates decline further, thereby enhancing the overall income of the portfolio.

Charles Schwab sent you a trade confirmation with the exact trades we placed in your portfolio. Please let us know if you would like to review these trades or your portfolio.

-SCM Investment Committee