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Well, if you understand fixed income, it's all about future value of today's dollar. And as yield investors are focused on maximizing the amount of income that they get in their fixed income allocation, future inflation erodes the purchasing power of that future income payment that they would receive from investing in the fixed income markets.

Inflation has been higher than investors expected, given the amount of stimulus that was pushed through the economy during the beginning of the COVID outbreak. You had significant amount of fiscal stimulus through the form of cash being pushed back into the consumer, spending at the federal government and state government levels, as well as monetary policy which was targeting zero interest rates, driving meaningful amounts of demand as all this money sloshed around the system.

The idea of having more demand than you had supply, whether that was related to supply chain issues or just people that felt wealthier because of the amount of money that was in the system, ultimately drove inflation to higher rates than we had seen since the 1970s or early 1980s. Since then, you've seen that money be largely spent. A lot of those checks that were sent out to the consumer have already been spent in the economy.

Monetary policy has been adjusted by the Fed through hiking interest rates to 5% to 5.25% where we sat until earlier this year. And the result is that inflation has shown improvement. Maybe not down yet to the Fed's target level, but it still remains in a positive trajectory and one that we're comfortable will be ultimately achieved over time.

There is a target from the Federal Reserve to have stable prices and full employment. Now, we have used 2% as that definition of stable prices for quite some time. The Fed talks about it as being their ultimate North Star. Their goal. But it's not necessarily a hard and fast rule that they have to hit 2% at all times.

And so you are going to go through periods like we think we're experiencing now, where inflation could be in the neighborhood of 2%. Maybe not exactly at 2%. And it will still allow the Fed to adjust monetary policy to more of a neutral policy rate, as they aim to keep that secondary objective that they have, which is full employment. As 2025 unfolds, we expect that inflation will show further signs of improvement as some of these lingering issues that have overhung the labor market are resolving themselves.

Current yield environment is one that is pretty average from a historical perspective. But if you compare it to where we were just a few years ago when rates were close to zero, it is certainly easier or with taking less risk in order to achieve an income target that an investor may be looking to enjoy.

We think today that the best opportunities are still in some of the spread sectors. High yield bonds offer attractive risk-reward characteristics. Yields are north of 7%. The quality of the high yield universe of issuers is higher than it's been in the lifetime of the index, and we continue to see improvement in the underlying fundamentals of these companies that are issuing in that market. So we believe the high yield market offers real attractive risk-reward characteristics today.

Similarly, we look at even investment-grade corporates as well as municipal bonds as offering attractive yields in an environment where we expect that the quality of those issuers will remain robust.

Most of the time when you go through an economic cycle like we just had, you see that eventually you'll get to the point where inflation does come down towards that 2% target. And it's generally in an environment where the unemployment rate is rising. The labor market is starting to show signs of deterioration.

At this point, we're still seeing some of the volatility in the markets attributable to the unknowns of how the impact of COVID will affect long-term inflation rates. The labor market. Globalization trends that had been firmly in place. And so, as a portfolio manager within the fixed income markets, it's still a little challenging to try to find exactly what the forward-looking path should be for interest rates. And so, as a result, we think it's really important to focus on high quality companies. High quality investments that offer that safe, secure income in the fixed income markets.

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