We continue to view the U.S. economy as slightly above average, with the Astor Economic Index® ticking down slightly from the month prior. Inflation remains well above the Fed’s target, driven by the indefatigable domestic consumer.
The Investment Committee left the Dynamic Allocation strategy’s positions unchanged this month. We think that the risks for equity markets are decently balanced, and thus supportive of an average allocation to stocks. We believe solid growth (the Atlanta Fed nowcast for 2Q GDP stands at 4.2%) and real wage gains should support equity prices, with consumption leading the charge. Nonetheless, risks towards the downside for equities have grown. We do see pockets of weakness, with a softer non-farm payroll print (175,000) and weak retail sales (-0.3% m/m in the control group). Notably, credit card delinquency has started to pick up.
In Active Income, the Investment Committee decided to continue adding duration in modest amounts to the portfolio. This month, several shorter maturity and floating rate positions were cut from the portfolio and in their place, securitized and treasury holdings further out the curve were added. As in the month prior, we think that markets are more accurately pricing Fed policy, and that several drivers of inflation (auto insurance, housing) should moderate over the medium term, thus making longer-term fixed income more attractive. CPI, which was released following our deliberations, will give the Fed more time to be patient before making another policy decision, with core CPI cooling slightly to 3.6% y/y.
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Astor Investment Management LLC is a registered investment adviser with the SEC. All information contained herein is for informational purposes only. This is not a solicitation to offer investment advice or services in any state where to do so would be unlawful. Analysis and research are provided for informational purposes only, not for trading or investing purposes. All opinions expressed are as of the date of publication and subject to change. They are not intended as investment recommendations. These materials contain general information and have not been tailored for any specific recipient. There is no assurance that Astor’s investment programs will produce profitable returns or that any account will have similar results. You may lose money. Past results are no guarantee of future results. Please refer to Astor’s Form ADV Part 2A Brochure for additional information regarding fees, risks, and services.
The Astor Economic Index® is a proprietary index created by Astor Investment Management LLC. It represents an aggregation of various economic data points. The Astor Economic Index® is designed to track the varying levels of growth within the U.S. economy by analyzing current trends against historical data. The Astor Economic Index® is not an investable product. The Astor Economic Index® should not be used as the sole determining factor for your investment decisions. The Index is based on retroactive data points and may be subject to hindsight bias. There is no guarantee the Index will produce the same results in the future. All conclusions are those of Astor and are subject to change. Astor Economic Index® is a registered trademark of Astor Investment Management LLC.
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MAS-M-549851-2024-05-21