Mid-Year Capital Market Update

Recessionary Resilience – Defying Expectations

Key Observations

• In our 2023 Outlook, Goodbye TINA, we outlined three broad themes that were likely to influence markets in 2023 – continued volatility, moderating inflation and a bear market bottom. The first half of 2023 has largely validated those views and we do not anticipate material changes ahead of year end rebalancing.

• Our portfolio positioning remains similar, and we believe our exposure to high-quality intermediate duration fixed income, in particular, adds to the resiliency of our portfolios while also benefiting longterm returns based on higher overall yields.

• While many anticipated a recession in 2023, one has yet to materialize. Our view is that while the risk of a recession is rising, attempting to time its occurrence is often unproductive. By positioning portfolios to weather potential risks associated with economic contractions, we can navigate these downturns more effectively and avoid the pitfalls often found with market timing.