Interest Rates

Recently, the U.S. Treasury Department announced modest reductions to T‑Bill supply. As expected, short‑dated tenor auctions — such as one‑month, six‑week, and two‑month — were trimmed after earlier increases this year. This follows a normal seasonal pattern, as the Treasury funds tax refunds via bill issuance in February and March, followed by a paydown in supply approaching the April 15 tax deadline.

While this pattern has had little impact on bill yields so far, there are additional cross‑currents to monitor. Tax law changes last year suggest refunds may be larger than in 2024. While the Treasury Department likely has better visibility and has planned issuance accordingly, the timing and size of refunds remain a wildcard for bill supply. In addition, recent court rulings on tariffs may require refunds. Although the timing and magnitude remain uncertain, a one‑off refund of roughly $175 billion could likely be absorbed by the bill market with limited yield disruption.

Overall, bill supply has behaved seasonally, and for now, changes in implied market pricing for future rate cuts remain a larger driver of bill yields than supply dynamics.

— Dan LaRocco, Head of Liquidity, Global Fixed Income

• Within credit markets, performance has remained bifurcated across high yield bonds and bank loans.
  
  
• There are $21bn of software loans and high yield bonds maturing by the end of 2027, but an additional $62bn and $74bn mature in 2028 and 2029, respectively.
  
  
• Loans make up the vast majority of the refinancing needs within this cohort.
  
  

Equities

Equities have been more volatile since the onset of the Middle East conflict in late February, when tensions grew into a regional confrontation and an effective closure of the Strait of Hormuz triggered a sharp rise in energy prices.

European stocks have underperformed U.S. markets given greater sensitivity to energy‑related shocks and weaker sentiment. Through the first two weeks of the conflict, Europe has seen roughly twice the decline of the U.S. market, with a weaker Euro further amplifying losses for U.S.‑based investors. Sharp increases in energy prices and local government bond yields emerged as key pressure points, coinciding with the most pronounced equity drawdowns and reinforcing the dominance of top‑down forces during this volatile period. Looking ahead, we maintain a cautiously constructive view on global equities as a whole. We continue to support a modest overweight to equities, expressed through a tactical overweight to U.S. and emerging market equities. We trimmed our exposure to developed ex-U.S. equities to neutral, preferring to reduce equity exposure in regions we view as most vulnerable to sustained energy disruptions.

— Jordan Dekhayser, Senior Equity Client Portfolio Manager and Daniel Kim, Associate Equity Client Portfolio Manager

• Europe has faced concurrent energy and rate headwinds.
  
  
• The timing of the equity drawdowns aligns with the largest oil moves.
  
  
• We have reduced our tactical overweight to developed ex-U.S. equities to equal-weight. We prefer U.S. and emerging market equities in this environment.
  
  

Real Assets

Brent crude has risen above $90 per barrel as escalating geopolitical tensions involving Iran, the United States, and key Gulf producers have disrupted oil production and export flows across the Middle East. The conflict has increased risks around critical energy infrastructure and key shipping routes, particularly the Strait of Hormuz, through which a significant share of global oil supply normally transits. Even limited disruptions or threats to transit have been enough to tighten supply conditions and push prices higher, as markets price in the possibility of prolonged outages.

At the same time, the conflict has amplified concerns about broader regional stability, raising the likelihood of production curtailments and delayed exports from major energy producers. With spare capacity limited and alternative routes unable to fully offset disruptions, oil markets have responded by embedding a higher risk premium, keeping prices elevated despite intermittent signs of easing. The Iran conflict has effectively turned geographic chokepoints into hard supply constraints, accelerating both the perception and reality of resource scarcity.                    

— Jim Hardman, Head of Real Assets, Multi-Manager Solutions

• Oil markets have priced in a higher risk premium given conflict in the Middle East.
  
  
• The conflict has accelerated both the perception and reality of resource scarcity.
  
  
• We reaffirmed our tactical overweight to natural resource equities and global listed infrastructure.