Vantage: Foreword from the CIO.

There's a saying "Good, fast, cheap: Pick two." Heading into the fourth quarter of 2026, investors find themselves in a similar place regarding three competing issues: An independent Federal Reserve (Fed), a U.S. federal budget deficit approaching two trillion dollars annually, and a calm bond market. Investors cannot count on all three holding at once— something needs to give. The question is: What gives first, and what will that mean for portfolios?

We did not create Vantage to recap what markets already know or to bury our conviction under a lengthy list of caveats. Rather, our goal is to clearly state our beliefs, articulate our positioning around those beliefs, and be transparent about the potential risks to our view. This first issue of Vantage starts with a view that feels uncomfortable because it does not fit the old cycle playbook: the productivity boom investors can see and the inflation households can feel may both be true at the same time. 

That sounds simple, but it cuts against much of what is priced today. Markets still want the old playbook back. For those who entered the industry after the Global Financial Crisis, it is essentially all they’ve ever known. Growth slows, inflation falls, the Fed eases, and bonds rally. 

We are not convinced. If the neutral rate is higher, today’s monetary policy may not be as tight as it appears. If inflation is supported by fiscal demand, regional supply chains, demographics, and energy constraints, productivity can help margins and growth, but it does not automatically return inflation to two percent.

This is neither a recession call, nor a classic stagflation call—it is a call for stronger nominal growth than investors are used to seeing. Growth that can support earnings but challenges interest-rate sensitive long-duration assets. It can lift nominal asset prices while inflation can erode the real value of fixed cash flows. It also means every rally in long bonds must answer a harder question: Who will fund the fiscal path, and at what price?

This is the heart of the matter. Fiscal policy is no longer background noise—it is now central to the investment outlook. The Fed can stay credible, but credibility may require rates to stay higher than markets expect. The Treasury can keep issuing, but investors may demand more compensation to own duration. Inflation can cool, but without a stronger fiscal anchor, we do not believe it glides neatly back to target.

There are, of course, risks to our view. If productivity passes through to prices faster than we expect, inflation could fall without something breaking on the growth front. If the labor market weakens enough, policy could become genuinely restrictive. If fiscal momentum changes, the pressure on the yield curve changes too. Discipline means we can’t fall in love with a view—and that we must know what would derail it.

The Vantage standard is:

• Articulate the view
• Show the portfolio implications
• Identify the risks
• Define the evidence that would force a rethink

What follows reflects that spirit. This is our best read of the road ahead, offered so clients can see not only what we believe, but how we are evaluating risks, opportunities, and the trade-offs that matter now.