In a quarter where a “risk-on” mentality generally prevailed, the third quarter saw U.S. stocks gain, Treasury yields rise, and credit spreads tighten. For their part, U.S. Treasury investors looked past threats of tariffs and trade wars to an economy that is still strong by all accounts.

As we move into the final quarter of 2018, the landscape is dotted with both opportunities and challenges, created by a combination of Federal Reserve policy, the Trump Administration, and frankly, time.

As we entered the second half of 2018, markets appeared to be hitting an inflection point. On one hand, economic data remained robust, with the consumer fully engaged, wages growing at a modest pace, industrial production steady, and the corporate tax cut creating the opportunity for meaningful investment.

By using a disciplined business cycle approach, investors can identify key phases in the economy to achieve active returns from sector allocation.

As investors, we are bombarded with information to digest, evaluate, and synthesize into coherent and actionable conclusions.

One of the most challenging aspects of evaluating opportunities at this point in the market cycle is the tendency of the market to be rather binary in its assessments.

As the first quarter closed, equity and bond markets were searching for direction following the losses posted in the back half of the quarter after an exemplary January.

As market strategists and pundits attempt to predict the end of this economic cycle, a commonly mentioned indicator is the term spread of U.S. Treasuries – or the difference between short-term yields and long-term yields.