The BEAT

Bonds | Equities | Alternatives | Transition

Monthly Global Market and Asset Allocation Guide

August 2025

The BEAT | June 2025

 The BEAT provides connectivity between changing market events and implications for
TOP IDEAS investor portfolios.

3 Spanning Bonds, Equities, Alternatives and Transition*, this monthly review provides timely
information across a broad array of markets and investment topics.

BONDS
22 Each edition explores investment ideas, identifies areas of focus and provides a
comprehensive outlook on asset allocation — all supported by a concise review of economic
22 and asset class data through clear and impactful charts.

We believe The BEAT is a critical desk reference that enables more informed discussion and
EQUITIES
34

understanding of financial markets.

34
17
29
3
ALTERNATIVES
45

45
If you are viewing this book on your computer or
TRANSITION
51
tablet, click or tap on the section box to jump to
the beginning of each section.
51

Data provided is for informational use only. See end of report for important additional information. *Transition is an asset allocation view, which refers to cash, cash equivalents or liquid
short-duration assets, such as short-dated Treasuries, that can be used to “transition” to other asset classes.

The BEAT | August 2025 2

KEY THEMES

Key Themes for August 2025

U.S. Equities: Climbing the Wall of Worry Europe: Capital Expenditure Is Making a Comeback
Through the noise. Equity markets continue to press higher Made for Germany. Following the announcement of the EUR 500
despite a fresh focus on tariffs, the related deadlines, concerns billion (bn) Infrastructure Fund in March, the private sector has also
around Fed independence and ongoing second-half growth stepped up to mobilize investment in Germany.
debates.
Top German companies have pledged to invest roughly EUR
Why higher? In part it’s a view that trade policy will ultimately be 630bn in the country over the next three years under an alliance
calibrated to avoid excess risk, and the absence of a post-tariff cliff called “Made for Germany.” Additional public sector incentives
has eased fears around growth implications. It also may be that include a EUR 46bn corporate tax relief package. Combined with
earnings revision breadth is picking up. History shows that yearly defense spending, public and private investment commitments now
estimates tend to experience upward revisions starting in July represent over 30% of German GDP.
through the second half of the year. While we assess risk with
ongoing uncertainty, current momentum favors optimism. Rate Cuts Despite Higher Inflation? Here's How...
Fed strategy review. At Jackson Hole in August, the Fed may
U.S.: Inflation Remains a Key Focus allude to a “strategy review” (its first since 2020) in which they
A balancing act. Both headline and core inflation have arguably discuss a change toward Flexible Average Inflation Targeting
stalled in their decline, yet not moved higher on tariffs. Even so, the (FAIT). While this is not listed explicitly as a primary theme, it could
soft data, namely Purchasing Managers Indexes (PMIs), have been be discussed within the broader context of labor market dynamics.
universally signaling stronger inflationary pressures. In addition, Why is this important? The result is a potential modification of the
certain tariff-exposed sub-categories showed a clear post-tariff step Fed's policy reaction function related to inflation. Instead of having
higher in the June Consumer Price Index (CPI). an explicit target of 2%, it could target an average level, meaning
So what does this mean for the Fed? There will be some inflation may be allowed to run above 2% for some time to offset
willingness to look through one-time price effects, but with growth times when it ran below. In all, this may enable the Fed to cut rates
showing resilience and inflation data signaling some pre-tariff despite inflation running above 2%. We find this a positive for
“stickiness,” current expectations for roughly five rate cuts through equities and higher-yielding credit assets, as it allows nominal
year-end 2026 may prove too optimistic. We continue to favor a growth to run hotter for longer.
slight underweight in duration, with the front-end of the curve
particularly vulnerable to a repricing based on policy expectations.

The views and opinions expressed are those of the Portfolio Solutions Group at the time of writing of this presentation and are subject to change at any time due to market, economic, or
other conditions, and may not necessarily come to pass. Not to be construed as an investment or research recommendation.

The BEAT | August 2025 3

TOP IDEAS

The Portfolio Solutions Group – Our Top Three Ideas

Credit: Add to Overweight on EU HY Relative to U.S. HY Rates: Moving Underweight Duration

Staying the course. We retain our preference for EU HY (High Yield) relative to Weighing the risks. We favor an underweight on duration, as the balance of
U.S. HY, as we see potential underperformance in the U.S. across both the rates growth and inflation risks likely means the Fed will enact fewer cuts than
and spread components. From a U.S. rates perspective, higher downside risks expected over the next 12-18 months. Economic growth in the U.S. continues
for growth and upside risks for inflation make current expectations for roughly five to show mild deceleration, but not a dramatic drop-off following the tariff-
Fed cuts by year-end 2026 appear overly optimistic, such that the front-end of induced demand pull-forward witnessed in March.
the curve is vulnerable to repricing.
At the same time, inflation remains a relevant risk, with current levels still
From a spread perspective, with current levels near all-time tights, U.S. HY above target and tariff impacts yet unclear. Additionally, fiscal concerns
spreads remain vulnerable to any downside growth surprises. Additionally, EU stemming from the passage of the One Big Beautiful Bill Act (OBBBA) remain
HY offers wider spreads on a quality-adjusted basis, and we remain more a structural force underpinning U.S. Treasury (UST) yields.
comfortable with default trends in Europe as well.

Japanese Government Bonds (JBG): Yield Curve Flattener Trade

Room for reversal. At ~150 basis points (bps), the 10s/30s section of the JGB curve
is thrice as steep as its U.S. and German counterparts. The reason is technical in
nature as demand from domestic investors, like life insurers, has diminished.

The Ministry of Finance swiftly announced shifting future issuances from the super-
long sector to the shorter end, effectively backstopping the supply/demand imbalance.
We have observed increased foreign investor demand for long-end JGBs, likely
enticed by the extra FX-hedged yield pickup. Additionally, the ongoing Bank of Japan
tapering of bond purchases will drive a net increase in “belly” supply. We prefer bar-
belling JGB exposure while avoiding the middle.

The views and opinions expressed are those of the Portfolio Solutions Group at the time of writing of this presentation and are subject to change at any time due to market, economic, or
other conditions, and may not necessarily come to pass. Not to be construed as an investment or research recommendation.

The BEAT | August 2025 4

TOP THEMES

Key Portfolio Themes and Implementation

Source: MSIM. For illustrative purposes only. Not a recommendation to buy or sell any security. It is not possible to invest directly in an index. The views and opinions expressed are those
of the portfolio management team at the time of writing/of this presentation and are subject to change at any time due to market, economic, or other conditions, and may not necessarily
come to pass. Forecasts/estimates are based on current market conditions, subject to change, and may not necessarily come to pass. Past performance is not indicative of future
results.

The BEAT | August 2025 5

TOP THEMES

U.S. Consumer Decelerates, but With No Sign of a Post-Tariff Collapse

Consumer spending through 2Q25 indicates some softness following the demand pull-forward seen in March, but consistent
with the longer-term trend of mild deceleration. This is in line with the labor market, where there is a slowdown in hiring, but
no sign of significant job losses. The absence of post-tariff weakness supports 2H25 optimism.

Retail Sales Show Steady, yet Mild, Deceleration… …Consistent With Trends in the Labor Market
Core retail sales, 3- and 6-month moving averages Continuing claims* level and trajectory, 2022-2025 YTD
0.80 2400
0.70
Steady deceleration, 2200
0.60 but not a collapse…
0.50 2000

0.40 1800
0.30
1600
0.20

0.10 1400

0.00
1200
-0.10

-0.20 1000
Jan 2024 Apr 2024 Jul 2024 Oct 2024 Jan 2025 Apr 2025 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52
Weeks
Core Retail Sales - 6M Avg Core Retail Sales - 3M Avg 2025 2024 2023 2022

Source: Bloomberg, MSIM. As of July 17, 2025. *Claims are not seasonally adjusted. For illustrative purposes only. Not a recommendation to buy or sell any security. It is not possible to
invest directly in an index. The views and opinions expressed are those of the portfolio management team at the time of writing/of this presentation and are subject to change at any time
due to market, economic, or other conditions, and may not necessarily come to pass. Forecasts/estimates are based on current market conditions, subject to change, and may not
necessarily come to pass. Past performance is not indicative of future results.

The BEAT | August 2025 6

TOP THEMES

Inflation Risk Remains a Key Focus in the U.S.

Headline and core inflation have not inflected higher in the wake of tariffs, but the prices paid component of U.S. PMIs has
been signalling risk. June’s CPI is also clearly higher in select tariff-exposed sub-categories. Second-half inflation trends hold
implications for both growth risk and Fed policy. Our current view is that risk skews toward fewer rate cuts.

PMIs Continue to Message Potential for Higher Prices Front-End Rates Have Rallied Amid Positions on Rate Cuts
Core PCE year-over-year (LH); PMI prices paid (RH) Implied cuts by 2026 (LH); U.S. 2-year yield (RH)
7.0 90 -1.0 4.4
6.5
85 -1.5
4.3
6.0
5.5 PMI surveys signal 80 -2.0
higher prices may 4.2
5.0 75 -2.5
be on the way
4.5 70 4.1
-3.0
4.0
65 -3.5 4.0
3.5
3.0 60 -4.0
3.9
2.5 55 -4.5
2.0 3.8
50
-5.0
1.5
45 3.7
1.0 -5.5
0.5 40
-6.0 3.6
2019 2020 2021 2022 2023 2024 2025
Dec 2024 Jan 2025 Feb 2025 Mar 2025 Apr 2025 May 2025 Jun 2025
US Core PCE YoY (Lagged 6M, LH)
# of Fed Cuts by Dec 2026 (LH) US 2Y Yield (RH)
ISM Manufacturing/Services Blended Prices Paid (RH)

Source: Bloomberg, MSIM. As of July 15, 2025. For illustrative purposes only. Not a recommendation to buy or sell any security. It is not possible to invest directly in an index. The views
and opinions expressed are those of the portfolio management team at the time of writing/of this presentation and are subject to change at any time due to market, economic, or other
conditions, and may not necessarily come to pass. Forecasts/estimates are based on current market conditions, subject to change, and may not necessarily come to pass. Past
performance is not indicative of future results.

The BEAT | August 2025 7

 TOP THEMES

Is the U.S. National Debt on a Sustainable Trajectory?

In 2025, net interest payments are projected to be about 18.4% of U.S. federal revenues, a significant increase from historic
levels, yet in line with the previous high (1991). While we see little risk in the country’s ability to rollover its debt near-term, the
current trajectory is unsustainable. Fiscal consolidation and monetization of the debt eventually may be required.

Net Interest Payments Have Risen to Near All-Time Highs

Trailing 12-month net interest payments as a % of total federal revenues; 2025 projection = 18.4%
20
19
18
17
16
15
% 14
13
12
11
10
9
8
7
6
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025

Source: Macrobond, MSIM. As of June 30, 2025. For illustrative purposes only. Not a recommendation to buy or sell any security. It is not possible to invest directly in an index. The views
and opinions expressed are those of the portfolio management team at the time of writing/of this presentation and are subject to change at any time due to market, economic, or other
conditions, and may not necessarily come to pass. Forecasts/estimates are based on current market conditions, subject to change, and may not necessarily come to pass. Past
performance is not indicative of future results.

The BEAT | August 2025 8

TOP THEMES

Equities Have Rallied to Record Highs Amid Growing Policy Uncertainty

Equity markets continue to press higher despite a fresh focus on tariffs and the related deadlines. Why? In part it represents
a view that trade policy will ultimately be calibrated to avoid excess growth risk. The absence of a post-tariff cliff has also
eased fears around growth implications.
Equities Have Remained Resilient Even as Trade Policy Uncertainty Has Returned
S&P 500 index (LH); Bloomberg global trade policy uncertainty (RH)

6300 Equities have returned 1

to record highs…
6200 2
6100 3
4
6000
5
5900
6
5800 7
5700 8
5600 9
… amid the return of
5500 policy uncertainty 10
5400 11
12
5300
13
5200
14
5100 15
5000 16
April 9th
4900 17
Nov 2024 Dec 2024 Jan 2025 Feb 2025 Mar 2025 Apr 2025 May 2025 Jun 2025 Jul 2025

S&P 500 (LH) Global Trade Policy Uncertainty (Inverted, RH)

Source: Bloomberg, MSIM. As of July 17, 2025. For illustrative purposes only. Not a recommendation to buy or sell any security. It is not possible to invest directly in an index. The views
and opinions expressed are those of the portfolio management team at the time of writing/of this presentation and are subject to change at any time due to market, economic, or other
conditions, and may not necessarily come to pass. Forecasts/estimates are based on current market conditions, subject to change, and may not necessarily come to pass. Past
performance is not indicative of future results.

The BEAT | August 2025 9

TOP THEMES

U.S. Earnings: The Case for Positive Surprises in 2H25

While negative earnings projections are typically revised early in the year, current-year (CY) 2025 and 2026 estimates were
revised down more than average after April 2. Recent trends have been more positive, mirroring historical 2 nd half results.

Positive Earnings Revisions Tend To Pick Up in the Second Half of the Year
S&P 500 CY earnings estimate evolution, CY 2025 and past 10-year average
1.0%

0.5%

0.0%

-0.5% April 2 – “Liberation Day”

-1.0%

-1.5%

-2.0%
CY estimates tend to
-2.5% … and recover in
get revised downward
the second half
early in the year…
-3.0%

-3.5%

-4.0%
15-Jan
22-Jan
29-Jan

11-Jun
18-Jun
25-Jun
16-Apr
23-Apr
30-Apr

14-May
21-May
28-May

7-Oct
12-Mar
19-Mar
26-Mar

15-Jul
22-Jul
29-Jul

4-Nov

2-Dec
9-Dec
1-Jan
8-Jan

12-Feb
19-Feb
26-Feb
5-Mar

7-May

4-Jun

1-Jul
8-Jul

12-Aug
19-Aug
26-Aug

16-Sep
23-Sep
30-Sep
5-Feb

9-Apr

14-Oct
21-Oct
28-Oct
2-Apr

11-Nov
18-Nov
25-Nov

16-Dec
23-Dec
30-Dec
5-Aug

2-Sep
9-Sep
2025 2026 Average, Past 10Y

Source: Bloomberg, MSIM. As of July 17, 2025. For illustrative purposes only. Not a recommendation to buy or sell any security. It is not possible to invest directly in an index. The views
and opinions expressed are those of the portfolio management team at the time of writing/of this presentation and are subject to change at any time due to market, economic, or other
conditions, and may not necessarily come to pass. Forecasts/estimates are based on current market conditions, subject to change, and may not necessarily come to pass. Past
performance is not indicative of future results.

The BEAT | August 2025 10

 TOP THEMES

Europe: German Infrastructure Spending Is Set for a Historic Surge

The “Made for Germany” initiative of ~EUR 630bn is in addition to the EUR 500bn Infrastructure Fund announced in March.
Combined with defense spending, public and private investment commitments represent over 30% of German GDP.

Trying To Bridge the Gap - German Public and Private Spending Has Materially Lagged the U.S. Since the Pandemic
Real gross fixed capital formation* rebased to 100 (as of 12/31/2020)
120
116.9
115

110

105
Index

100
95.1
95

90

85

80
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Germany Real Gross Fixed Capital Investment US Real Gross Fixed Capital Investment SAAR

Source: Bloomberg, MSIM. As of July 18, 2025. *Public and private investment. For illustrative purposes only. Not a recommendation to buy or sell any security. It is not possible to invest
directly in an index. The views and opinions expressed are those of the portfolio management team at the time of writing/of this presentation and are subject to change at any time due to
market, economic, or other conditions, and may not necessarily come to pass. Forecasts/estimates are based on current market conditions, subject to change, and may not necessarily
come to pass. Past performance is not indicative of future results.

The BEAT | August 2025 11

TOP IDEAS

Japanese Government Bond (JBG) Yield Curve Flattener Trade

Japan’s Ministry of Finance acting as a backstop to shift future issuances away from the super-long sector, and increased
foreign demand enticed by attractive FX-hedged JGB long-end yields, could drive a partial reversal of the steepening trend.

JGB 10s/30s Yield Curve Is Much Steeper Than USTs and German Bunds
G3 government bonds 10s/30s yield curves

160

140

120

100
Basis Points

80

60

40

20

-20
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

UST German Bund JGB

Source: Bloomberg, MSIM. As of July 17, 2025. For illustrative purposes only. Not a recommendation to buy or sell any security. It is not possible to invest directly in an index. The views
and opinions expressed are those of the portfolio management team at the time of writing/of this presentation and are subject to change at any time due to market, economic, or other
conditions, and may not necessarily come to pass. Forecasts/estimates are based on current market conditions, subject to change, and may not necessarily come to pass. Past
performance is not indicative of future results.

The BEAT | August 2025 12

TOP IDEAS

Real Estate Fundamentals Continue to Improve

Real estate has been experiencing a repricing over the last few years in response to higher interest rates, cyclical oversupply
and, in certain sectors, secular demand destruction. That said, the long-term operating outlook is markedly improving, with
future supply materially decreasing and the demand in certain sectors stabilizing.

U.S. Cap Rates Have Stabilized… …and Asset Valuations Are Below Replacement Cost
Real estate sector cap rates (%) Residential price index (LH), construction as % of inventory (RH)
300 7%
10.0

9.0 6%
250
8.0
5%
7.0 200
6.0 4%
5.0 150
3%
4.0
100
3.0 2%

2.0 50 1%
1.0

- 0 2005 0%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Jun-04

Jun-10
Mar-05

Jun-07
Mar-08

Mar-11

Jun-13
Mar-14

Jun-16
Mar-17

Jun-19
Mar-20

Jun-22
Mar-23
Dec-02
Sep-03

Dec-05
Sep-06

Dec-08
Sep-09

Dec-11
Sep-12

Dec-14
Sep-15

Dec-17
Sep-18

Dec-20
Sep-21

Dec-23
Sep-24

Construction Price Index Market Sale Price Index

Office Retail Industrial Residential 10y GOV
Construction % of Inventory

Source: CoStar, Bloomberg, Bureau of Labor Statistics. For illustrative purposes only. Not a recommendation to buy or sell any security. It is not possible to invest directly in an index. The
views and opinions expressed are those of the portfolio management team at the time of writing/of this presentation and are subject to change at any time due to market, economic, or
other conditions, and may not necessarily come to pass. Forecasts/estimates are based on current market conditions, subject to change, and may not necessarily come to pass. Past
performance is not indicative of future results..

The BEAT | August 2025 13

TOP IDEAS

OBBB Act Expected to Spark Bargain Prices for U.S. Renewables

2Q25 saw the fewest U.S. renewable transactions since 2021 as stakeholders awaited the final version of OBBB Act. With
the bill now law, regulatory certainty has improved. Owner/operators able to raise funds quickly are now well-positioned to
acquire projects at favorable prices from weaker developers unable to meet near-term tax credit deadlines.

Renewable Deals Have Decreased Significantly… …Despite a Significant Increase in Projects Expected to
U.S. renewable energy transaction volumes $m Become Operational in 2025-2026
Capacity (gigawatts) entering queues in years shown

6,000
600 561
4,870
5,000
500

4,000
3,350 400 349
3,000 300 270

2,000 1,539 200

1,000 100

0 0
2022-2024 Quarterly 1Q25 2Q25 2017-2019 Yearly 2020 (COD 2025) 2021 (COD 2026)
Avg. Average (COD 2022-
2024)

Source: Left Chart – Preqin as at 18th July 2025. Renewable deals include Solar Power, Clean Technology, Wind, and Renewable Energy classifications in Preqin. Right Chart: Berkeley
Lab, Queued Up: 2024 Edition. The charts represent the total capacity gigawatts (GW) of projects entering interconnection queues in each year between 2017 and 2021. Based on most
recent data, it takes, on average, five years from joining the interconnection queue to reaching COD (Commercial Operation Date). Not all projects joining the interconnection queue reach
COD as completion rates are <15% and have been trending downwards. In all cases, the data represents projects expected to be successful by the date indicated. For illustrative
purposes only. Not a recommendation to buy or sell any security. It is not possible to invest directly in an index. The views and opinions expressed are those of the portfolio management
team at the time of writing/of this presentation and are subject to change at any time due to market, economic, or other conditions, and may not necessarily come to pass.
Forecasts/estimates are based on current market conditions, subject to change, and may not necessarily come to pass. Past performance is not indicative of future results..

The BEAT | August 2025 14

TOP IDEAS

Municipals: Opportunity at the Long End of the Muni Curve

As of July 31, 2025, the 5s/30s AAA muni spread sits at 214 basis points (bps), more than double the U.S. Treasury curve.
This sharp steepness is rare, having occurred only three times since 2006. When the 5s/30s spread is over 200 bps, 12-
month forward returns for the long end of the muni curve have been compelling, averaging 11.60%.

Municipal 5s/30s Yield Spread History

350 Meredith
GFC Whitney
Taper Tantrum
300

250

200

150

100

50

Muni 5s30s Spread

Source: Bloomberg, MSIM. As of July 31, 2025. The views and opinions expressed are those of the Portfolio Solutions Group at the time of writing/of this presentation and are subject to
change at any time due to market, economic, or other conditions, and may not necessarily come to pass. Forecasts/estimates are based on current market conditions, subject to change,
and may not necessarily come to pass. It is not possible to invest directly in an index. Past performance is no guarantee of future results.

The BEAT | August 2025 15

Capital Markets Investment Framework Current allocation
Change from previous
––
–
High conviction underweight
Underweight
= Neutral
Representative Allocations From the Portfolio Solutions Group + Overweight
++ High conviction overweight
Asset Allocation Our View Commentary
–– – = + ++
Bonds
We move underweight on duration. Stable economic growth trends paired with potential inflationary
Duration pressure will likely mean fewer Fed rate cuts over the next 12-18 months. Additionally, fiscal
concerns remain a structural force underpinning UST yields.
Credit spreads continue to trend near all-time tight levels, while defaults remain somewhat elevated
Credit by comparison. As such, we continue to view the risk/reward asymmetry in credit as unfavorable.

Equities
Risks remain balanced for equities as news on the tariff and non-tariff fronts is likely to be noisy,
with scope for surprise in either direction. We remain overweight the U.S., where we continue to
Risk Level
see stable growth and positive trends in earnings revisions amid heightened policy uncertainty.

Alternatives Private equity (PE) investors have felt constrained distribution since 2022. We expect to see higher
dispersion in underlying capital markets for new investments, and we recognize the increased
importance of European exposure along with emerging markets allocations, such as India.
Private Markets
In private credit, we favor non-cyclical exposures in corporate lending, and acknowledge the
increased supply for opportunistic and special situation lenders that have a greater degree of
flexibility in their debt strategies
Hedge Funds
The macro environment has been disruptive for many fundamental hedge fund alpha themes. We
maintain our high conviction in relative value strategies able to capitalize on high levels of intra-
market dispersion.

Commodities We remain neutral on energy, as geopolitical upside risks are balanced by high spare capacity in
markets such as crude, which limit upside absent physical disruptions. In the current environment
we continue to see precious metals as a segment that could enjoy structural tailwinds.
Transition
We remain underweight cash and short duration instruments.
Cash/Short Duration

For informational purposes and does not constitute an offer or a recommendation to buy or sell any particular security or to adopt any specific investment strategy. The tactical views expressed
above are a broad reflection of our team’s views and implementations, expressed for client communication purposes. Individual team allocations may differ. The information herein does not
contend to address the financial objectives, situation or specific needs of any individual investor. The signals represent the Portfolio Solutions Group view on each asset class.

The BEAT | August 2025 16

Global Fixed Income Current allocation
Change from previous
––
–
High conviction underweight
Underweight
Representative Positioning From Portfolio Solutions Group = Neutral
+ Overweight
++ High conviction overweight

Fixed Income Our View Commentary

–– – = + ++
Bonds

Resilience in U.S. economic data and growing inflationary pressures likely mean fewer Fed rate
U.S. Treasuries (USTs) cuts over the next 12-18 months. As such, we believe there is room for front-end yields to rise.

We see some value in Inflation-Linked Bonds, particularly in the longer sections of the curve, with
Inflation-Linked Bonds 5Y/5Y inflation currently at 2.31%.

We remain neutral EU duration; Germany’s fiscal pivot is likely to result in a higher trading range for
Eurozone Govt. Bonds EU rates compared to post-GFC. Additionally, fiscal spending and higher energy prices likely
reduces the ECB’s appetite to deliver additional rate cuts.

EM Hard Currency Govt. We move overweight EM debt. Spreads remain tight vs. corporate credit, but the asset class offers
Bonds higher quality-adjusted carry and a strong fundamental backdrop.

EM Local Currency Govt. At the GBI-EM index level, real rates are near central bank targets and FX valuations are broadly
Bonds in-line with longer-term medians. We do see pockets of value in the EM Local space, but would
prefer to access the asset class actively, as we see much less value in a passive approach.

For informational purposes and does not constitute an offer or a recommendation to buy or sell any particular security or to adopt any specific investment strategy. The tactical views expressed
above are a broad reflection of our team’s views and implementations, expressed for client communication purposes. Individual team allocations may differ. The information herein does not
contend to address the financial objectives, situation or specific needs of any individual investor. The signals represent the Portfolio Solutions Group view on each asset class.

The BEAT | August 2025 17

Global Fixed Income Current allocation
Change from previous
––
–
High conviction underweight
Underweight
Representative Positioning From Portfolio Solutions Group = Neutral
+ Overweight
++ High conviction overweight

Fixed Income Our View Commentary

–– – = + ++
Public Credit

After briefly tightening in early July, Muni/UST ratios at the long-end of the curve have widened
Municipal Bonds back to attractive levels, even after accounting for lower effective tax rates following the passage of
the OBBBA.

Investment Grade (IG)

With spreads back near all-time tights, IG has poor convexity in the current environment.

MBS/ABS We continue to hold a high conviction in ABS, as yield per unit of credit quality remains attractive.

We remain underweight U.S. HY and overweight in EU. EU HY continues to offer more attractive
High Yield (HY) spread than U.S. HY (adjusting for ratings differentials), and more comfortable with the defaults in
backdrop in EU.
We remain neutral bank loans. We like the high carry and the floating rate nature of the asset class,
Bank Loans but continue to hold concerns related to default trends, which have recently outpaced HY
significantly.

For informational purposes and does not constitute an offer or a recommendation to buy or sell any particular security or to adopt any specific investment strategy. The tactical views expressed
above are a broad reflection of our team’s views and implementations, expressed for client communication purposes. Individual team allocations may differ. The information herein does not
contend to address the financial objectives, situation or specific needs of any individual investor. The signals represent the Portfolio Solutions Group view on each asset class.

The BEAT | August 2025 18

Global Equity Current allocation
Change from previous
––
–
High conviction underweight
Underweight
Representative Positioning From Portfolio Solutions Group = Neutral
+ Overweight
++ High conviction overweight

Equity Our View Commentary

–– – = + ++
Regional
United States: News flow is likely to remain noisy, but we remain overweight the U.S. on the back
of continued improvement in earnings revision breadth. We continue to believe the potential for
Developed Markets
positive surprises in 2H25 as long as economic growth remains resilient amid fears of a second half
deceleration.
Europe: We continue to hold a positive view on structural trends in Europe, but earnings revisions
U.S. at the broad index level continue to lag other regions. As such, we opt for a more targeted
approach within Europe and retain our overweight exposure to European banks and German mid-
caps (MDAX).
Eurozone Japan: We remain neutral Japanese equities; earnings have continued their relative
underperformance, although the recent better-than-expected trade deal with the U.S. should relieve
some pressure on the more export-heavy segments of the market, i.e., autos. We continue to hold
a constructive view on Japan’s structural reforms and longer-term prospects.
Japan

Emerging Markets: Tail risks for EM were substantially lowered as trade deals continue to be
agreed on by the U.S. and a few EM countries. Within EM, we remain overweight India while
Emerging Markets maintaining China at neutral.

For informational purposes and does not constitute an offer or a recommendation to buy or sell any particular security or to adopt any specific investment strategy. The tactical views expressed
above are a broad reflection of our team’s views and implementations, expressed for client communication purposes. Individual team allocations may differ. The information herein does not
contend to address the financial objectives, situation or specific needs of any individual investor. The signals represent the Portfolio Solutions Group view on each asset class.

The BEAT | August 2025 19

Global Equity Current allocation
Change from previous
––
–
High conviction underweight
Underweight
Representative Positioning From Portfolio Solutions Group = Neutral
+ Overweight
++ High conviction overweight

Equity Our View Commentary

–– – = + ++
Style

Since mid-2022, the Growth vs. Value trade has been dictated primarily by high-beta tech
Growth vs. Value exposure, with Growth outperforming Value as markets rise, yet underperforming as they fall. In
this context, a neutral view on equities suggests a neutral view on Growth vs. Value.

Quality We retain a preference for Quality as growth decelerates relative to the past three years.

We remain overweight large caps in the U.S., as the cohort continues to show stronger earnings
revisions relative to SMID. USD weakness remains a structural headwind for SMID, given the
Large Cap vs. Small Cap
segment’s more domestic sales exposure.

Cyclical vs. Defensive Sectors Our current cyclical exposure remains in Europe and relies more on structural growth drivers.

For informational purposes and does not constitute an offer or a recommendation to buy or sell any particular security or to adopt any specific investment strategy. The tactical views expressed
above are a broad reflection of our team’s views and implementations, expressed for client communication purposes. Individual team allocations may differ. The information herein does not
contend to address the financial objectives, situation or specific needs of any individual investor. The signals represent the Portfolio Solutions Group view on each asset class.

The BEAT | August 2025 20

Alternatives
Commentary From the Portfolio Solutions Group
Alternative Assets Commentary
Private Markets
Private equity investors have been experiencing constrained distribution activity since 2022 when the shift in the interest rate regime triggered adjustments across capital markets. There was
optimism after last year’s U.S. election that directional clarity and pro-market policy could support a recovery in distribution levels, but the recovery in investor cash flows has been more
delicate than expected due to the shock factor and uncertainty associated with recent policy announcements. We think valuations offer a fair entry for new investments. Successful strategies
Private Equity will minimize downside exposure to the exogenous risks such as GDP growth, inflation and changes to global trade. We think they will be associated with organic growth initiatives using
relatively modest leverage, and will likely participate, either as enablers or adopters, in the transformational technology changes that are taking place. While U.S. private equity is expected to
benefit from its deep network of specialist private equity managers, European private opportunities potentially increases in its competitiveness as recently announced growth-related policies
provide a tailwind and the country-specific nature of European private equity now potentially represents an advantage because of the resulting focus on local revenues. We are constructive on
India private equity due to both domestically-driven growth as well as the potential to invest in alternative global supply chains, although we note manger selection will be very important.
Commercial real estate currently offers compelling entry valuations at a time of stabilizing fundamentals. The 2022 to 2024 period was a challenging one for real estate, characterized by high
interest rates, oversupply and difficult fundraising. In response to these dynamics, pricing has reset materially lower while the cost and availability of debt has stabilized and future supply is
much lower. Private equity real estate fundraising has yet to recover, however, presenting a unique opportunity for those with capital willing to invest in the sector, particularly in growing,
fundamentally strong sectors such as industrial, residential and net lease.
Private
Real Assets Infrastructure companies have demonstrated very strong cost pass-through and margin stability, often through fixed construction costs and contracted revenues linked to inflation. They’ve
also demonstrated impressive demand growth in sectors such as power and data and are not directly impacted by tariffs from a revenue perspective as they are not expected to produce
goods that are sold to the U.S., although transportation assets are linked to trade volumes. In relation to the cost impact from tariffs, the renewables supply chain is worth watching, with
batteries and solar being more exposed to China, and wind power equipment less so due to more established supply chains through Europe and Mexico. The enactment of OBBBA and the
deadlines associated with receiving full tax credits will pressure owners of late-stage development projects which do not have the funds required to advance them fast enough.
Within corporate lending, liability management exercises (“LMEs”) and borrowers exercising payment in kind ("PIK") toggles continue to increase, while realized and unrealized losses in
portfolios have trended up to a multi-year high. Within Direct Lending we are focused on lower risk strategies – senior secured first liens, tier one sponsors, clean credit stories, non-cyclicals,
Private Credit strong management teams and defendable market-leading positions. Pricing and terms in Europe offer a risk-adjusted enhancement to U.S. direct lending. More broadly, the increased
challenges being faced by corporate borrowers is providing opportunities for opportunistic and special situation lenders that have a greater degree of flexibility in their debt mandates. Real
estate debt is also currently attractive, as traditional bank lenders remain less active, yet property fundamentals stabilize and pricing has reset.
Liquid Alternatives
The macro environment has been disruptive for many fundamental hedge fund alpha themes. However, we are cognizant that rich environments for stock picking alpha tend to follow these
periods and expect an expanding opportunity set in the second half of 2025. We continue to prefer specialist hedge fund managers best positioned to analyze and adapt to the ongoing stimuli,
Hedge Funds including trade rhetoric, geopolitical tensions, a rapidly evolving AI landscape and disparate global monetary policies. Highly liquid macro strategies have been responsive to rapidly changing
market dynamics, and we believe will continue to contribute to performance should broader volatility persist. We maintain our high conviction in relative value strategies able to capitalize on
high levels of intra-market dispersion.
We remain neutral on energy commodity markets, as geopolitical upside risks are balanced by high spare capacity in markets such as crude, which limit upside absent physical disruptions. In
Commodities
the current environment we continue to see precious metals as a segment that could enjoy structural tailwinds.

For informational purposes and does not constitute an offer or a recommendation to buy or sell any particular security or to adopt any specific investment strategy. The tactical views
expressed above are a broad reflection of our team’s views and implementations, expressed for client communication purposes. Individual team allocations may differ. The information
herein does not contend to address the financial objectives, situation or specific needs of any individual investor. The signals represent the Portfolio Solutions Group view on each asset
class. Note: Over/underweight in private markets refers to decisions regarding the flow of new investments, not the stock of existing investments.

The BEAT | August 2025 21

BONDS

Sovereign Bond Yields

Developed Markets Emerging Markets
(10 yr. Yield) (10 yr. Yield)

16% 16%
1 Mo. Ago 1 Mo. Ago
12 Mo. Ago 12 Mo. Ago

12% 12%

8% 8%

4% 4%
July ’25

July ’25
0% 0%

Past performance is no guarantee of future results.

It is not possible to invest directly in an index. Source: Factset as of 7/31/25. Data provided is for informational use only. See end of report for important additional information.

The BEAT | August 2025 22

BONDS

Key Rates (%)

Security Current 12-Mo. Ago Average Minimum Maximum

1-Week SIFMA 2.29 3.51 2.88 1.86 4.21

Secured Overnight Financing Rate 4.39 5.38 4.57 4.26 5.38
1-Mo SOFR 4.35 5.34 4.53 4.29 5.35
3-Mo SOFR 4.30 5.24 4.46 4.21 5.24
2-Yr Treasury 3.94 4.26 4.00 3.54 4.39
5-Yr Treasury 3.95 3.92 4.01 3.41 4.61
10-Yr Treasury 4.36 4.05 4.26 3.62 4.79
30-Yr Treasury 4.89 4.34 4.60 3.93 5.08
2-Yr Japan 0.82 0.45 0.62 0.26 0.88
10-Yr Japan 1.56 1.03 1.21 0.80 1.60
2-Yr German Bund 1.97 2.52 2.05 1.66 2.48
10-Yr German Bund 2.70 2.31 2.44 2.03 2.91
2-Yr UK Gilt 3.87 3.80 4.07 3.53 4.60
10-Yr UK Gilt 4.57 3.97 4.42 3.74 4.89
Bloomberg US Agg 4.64 4.64 4.65 4.10 5.11
Bloomberg Global Agg 3.57 3.62 3.57 3.26 3.86
Bloomberg US Corporate 5.07 5.14 5.14 4.64 5.55
Bloomberg US Long Corporate 5.76 5.49 5.66 5.07 6.15
Bloomberg US Municipal 3.98 3.58 3.72 3.28 4.47
Bloomberg US Long Municipal 5.02 4.16 4.45 3.94 5.16
US High Yield 7.07 7.61 7.37 6.98 8.65
US Loans 8.34 9.78 8.82 8.28 9.86

Past performance is no guarantee of future results.

It is not possible to invest directly in an index. Source: Bloomberg, Leveraged Commentary & Data (LCD), and Factset as of 7/31/25. Current represents most recent month. Average,
minimum, and maximum measure a 12-month period ending most recent month. Data provided is for informational use only. US High Yield is represented by ICE BofA US High Yield
Index. US Loans is represented by Morningstar LSTA U.S. Leveraged Loan Index. Bloomberg indices and ICE BofA US HY index using yield to worst. Morningstar LSTA U.S. Leveraged
Loan Index using yield to maturity. SOFR is the Secured Overnight Financing Rate, a broad measure of secured overnight U.S. Treasury repo rates. See end of report for important
additional information.

The BEAT | August 2025 23

BONDS

Monetary Policy

Central Bank Policy Rates Market Expectations for Future Central Bank Rates
Current 1-Mo. Ago 12-Mo. Ago
5.0%
U.S. Federal Reserve 4.50% 4.50% 5.50%
10% 4.49%
BOE
U.S. Federal Reserve
BOE 4.25% 4.25% 5.25% 4.23%
9% 3.95%
BOJ 0.50% 0.50% 0.25% 4.04%
4.29%
4.0% 3.74%
4.0%
8% BOE 4.06%
ECB 2.15% 2.15% 4.25%
3.70% 3.61%
3.88% Reserve
U.S. Federal 3.80% 3.61%
3.34% 3.41%
3.62% 3.55%
7% 3.66%

3.0%
6% 3.0% 3.25% 3.22%
BOE 3.03%
U.S. Federal Reserve
ECB
5%
2.48%

4% 2.0% 2.30%
2.0%
ECB 1.95% 2.03% 1.85%
3% 1.95% 1.72%
1.66%
1.81%
1.83%
0.83% 1.18%
2% 1.0% 0.74% 0.86%
ECB 0.80%
1.0% 0.58%
0.47% 0.70% 0.56%
1% BOJ BOJ 0.57%
BOJ
0% 0.0%
'98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24 3M 6M 1Y 2Y 3Y
0.0%
(1%) 3M 6M 1Y 2Y 3Y

Source: Bloomberg, Factset as of 7/31/25. Data provided is for informational use only. See end of report for important additional information. Forecasts/estimates are based on current
market conditions, subject to change, and may not necessarily come to pass.

The BEAT | August 2025 24

BONDS

U.S. Treasury Yields

U.S. Treasury Yield Curves

Yields & Performance
7%
Yield (%) Total Return (%)

Security 1-Mo. 12-Mo.

6% Current 1-Mo. 12-Mo.
Ago Ago

5% July ‘25 3-mo. Treasury 4.33 4.29 5.26 0.35 4.57

1-Mo. Ago

12-Mo. Ago 6-mo. Treasury 4.27 4.25 5.08 0.33 4.60

4%

2-yr. Treasury 3.94 3.71 4.26 -0.13 4.07

3%
3-yr. Treasury 3.88 3.68 4.07 -0.22 4.23

2%
5-yr. Treasury 3.95 3.79 3.92 -0.42 3.60

1% 10-yr. Treasury 4.36 4.23 4.05 -0.67 1.62

30-yr. Treasury 4.89 4.79 4.34 -1.22 -4.85

0%
3M 2Y 5Y 10Y 30Y

Source: Factset, Morningstar as of 7/31/25. Data provided is for informational use only. Past Performance is not a reliable indicator of future results. See end of report for important
additional information.

The BEAT | August 2025 25

BONDS

Characteristics and Performance Analysis

Averages Total Returns (%)

Coupon Price Yield to Spread Maturity Duration

Index
(%) ($) Worst (%) (bps) (yrs.) (yrs.) 1-Mo. 3-Mo. YTD 1Y 3Y 5Y 10Y
U.S. High Grade
Bloomberg U.S. Aggregate Index 3.58 92.2 4.64 31 8.3 6.0 -0.26 0.54 3.75 3.38 1.64 -1.07 1.66
U.S. Treasury 3.17 92.5 4.19 − 7.7 5.8 -0.39 -0.18 3.39 2.64 0.86 -1.90 1.08
U.S. Mortgage Backed Securities 3.45 89.4 5.07 40 7.9 6.0 -0.40 0.44 3.81 3.36 1.11 -0.72 1.19
U.S. Asset Backed Securities 4.68 99.7 4.53 51 3.6 2.7 0.13 1.02 3.06 5.03 4.17 1.88 2.30
U.S. Commercial Mortgage Backed Securities 3.45 94.9 4.82 80 4.4 3.9 -0.12 0.85 4.37 5.45 3.19 0.59 2.44
U.S. Corp. Investment Grade 4.41 93.7 5.07 76 10.4 6.8 0.07 1.92 4.24 4.49 3.26 -0.49 2.88
Bloomberg Municipal Bond Index 4.64 99.1 3.98 − 13.3 7.0 -0.20 0.48 -0.55 0.00 1.54 0.13 2.11
Bloomberg Taxable Municipal Bond Index 4.42 92.1 5.08 − 14.1 7.8 -0.16 0.73 3.66 2.71 2.29 -0.95 2.99
ICE BofA US Inflation-Linked Treasury Index 1.15 93.6 1.65 − 7.5 5.2 0.07 0.43 4.68 3.90 0.75 0.95 2.65
ICE BofA Preferred Index (Fixed Rate) 5.49 90.6 5.90 101 − 6.2 1.45 3.84 2.47 4.76 4.16 2.12 4.07
U.S. High Yield
ICE BofA US High Yield Index 6.56 97.0 7.07 286 4.7 3.0 0.40 3.98 4.97 8.55 7.87 5.11 5.40
Morningstar LSTA U.S. Leveraged Loan Index S+3.29 97.4 8.34 417 4.5 − 0.88 3.27 3.71 7.50 9.24 7.22 5.24
Emerging Markets
J.P. Morgan EM Bond Index (EMBI) Global Diversified 5.53 88.8 7.44 299 − 6.5 1.27 4.87 6.98 9.32 8.28 1.31 3.61
J.P. Morgan Corp. EM Bond Index (CEMBI) Broad Diversified 5.45 96.3 6.23 196 − 4.4 0.91 2.94 4.98 7.19 7.54 2.73 4.17
J.P. Morgan Govt. Bond Index-EM (GBI-EM) Global Diversified 5.60 − 5.96 − − 5.3 -0.75 3.46 11.42 10.45 8.09 1.13 2.30
Global Developed Markets
Bloomberg Global Aggregate Ex-U.S. Index 2.34 95.7 2.67 26 8.4 6.9 -2.51 -0.49 7.24 5.10 1.23 -2.97 0.36
FTSE World Government Bond Index 2.61 − 3.20 − − 6.9 -1.79 -0.61 5.35 3.59 0.48 -3.53 0.33
ICE BofA European Union Government Bond Index 2.19 93.6 2.80 37 8.8 7.2 -2.72 0.34 10.96 7.77 3.07 -3.24 0.28
ICE BofA Developed Mkts HY Ex-Sub Fincl Index (USD Hedged) 6.29 97.4 6.66 305 3.7 2.9 0.64 3.90 5.02 8.88 8.38 5.33 5.51
Bloomberg Euro-Aggregate Corporates (EUR) 2.68 98.1 3.04 79 5.1 4.4 0.53 1.34 2.34 4.81 2.77 0.32 1.36
Bloomberg Pan-European High Yield Euro (EUR) 4.95 99.2 5.34 273 4.0 3.3 1.16 2.99 3.92 8.04 7.81 4.33 3.90

Past performance is no guarantee of future results. It is not possible to invest directly in an index. Source: Bloomberg, J.P. Morgan, ICE BofA Data Indices, LLC, Factset, and Leveraged
Commentary & Data (LCD), as of 7/31/25. Data provided is for informational use only. See end of report for important additional information. Yield to maturity is shown for the Morningstar
LSTA U.S. Leveraged Loan Index and the FTSE World Government Bond Index. S+ refers to SOFR (Secured Overnight Financing Rate) as the base rate. Loan Index spread represents
the three-year discounted spread over SOFR. Returns of the ICE BofA Developed Mtks HY Ex-Sub Financial Index are USD Hedged. The averages for the index are unhedged. Returns
and averages for the Bloomberg Euro-Agg Corps and Bloomberg Pan-Euro HY indices are in EUR (unhedged).

The BEAT | August 2025 26

BONDS

Spread Analysis (bps)

1,600

1,400 1331
High

1,200 1087
Current
Median 1,000

Low
800
721

600 492
373 465
400 325 417 390
260 362
366 299 286
200 127 132
261 259
83 76 115 101 127
31 44 40 51 52 80
0 35
54 74
29 7 22
-200 -88
Floating-Rate Emerging
Aggregate MBS ABS CMBS Corporate Preferred Loans Markets (USD) High Yield

Max Spread Date 3/20/2020 3/19/2020 3/26/2020 3/25/2020 3/23/2020 3/23/2020 3/20/2020 3/23/2020 3/23/2020

Min Spread Date 4/14/2021 4/14/2021 6/21/2021 6/21/2021 11/08/2024 12/6/2017 4/20/2018 2/1/2018 1/22/2025

Spread on 12/31/24 34 43 44 80 80 77 424 325 292

Spread on 12/31/23 42 47 68 126 99 148 490 384 334

Spread on 12/31/22 51 51 76 120 130 227 645 452 479

Past performance is no guarantee of future results. It is not possible to invest directly in an index. Source: Factset and Leveraged Commentary & Data (LCD) as of 7/31/25. Spread
history measures past 10 years. Data provided is for informational use only. See end of report for important additional information. All fixed-income spreads are in basis points and
measure option-adjusted yield spread relative to comparable maturity U.S. Treasuries using daily data. Aggregate represented by Bloomberg US Aggregate Index. MBS represented by
Bloomberg U.S. Mortgage Backed Securities (MBS) Index. ABS represented by Bloomberg U.S. Asset Backed Securities (ABS) Index. CMBS represented by Bloomberg U.S. CMBS
Investment Grade Index. Corporate represented by Bloomberg U.S. Corporate Investment Grade Index. Preferred represented by ICE BofA Fixed Rate Preferred Securities Index.
Floating-Rate Loans represented by Morningstar LSTA U.S. Leveraged Loan Index. Loan Index spread represents the three-year discounted spread over SOFR (Secured Overnight
Financing Rate). Emerging Markets(USD) represented by J.P. Morgan Emerging Markets Bond Index (EMBI) Global Diversified. High Yield represented by ICE BofA US High Yield Index.

The BEAT | August 2025 27

BONDS

Corporate Bond Market Update

Averages Total Returns (%)

Coupon Price Yield to Spread Maturity Duration

(%) ($) Worst (%) (bps) (yrs.) (yrs.) 1-Mo. 3-Mo. YTD 1Y 3Y 5Y 10Y

U.S. High Grade

Bloomberg U.S. Corp. Investment Grade Index 4.41 93.7 5.07 76 10.4 6.8 0.07 1.92 4.24 4.49 3.26 -0.49 2.88

AAA Index 3.47 83.3 4.84 30 16.4 9.8 -0.24 0.67 3.30 1.18 -0.22 -3.65 1.85

AA Index 3.79 89.7 4.80 43 12.2 7.6 -0.13 1.13 3.65 3.05 1.31 -2.03 1.71

A Index 4.30 93.9 4.94 64 10.2 6.8 0.05 1.70 4.28 4.26 2.76 -0.97 2.55

BBB Index 4.64 94.5 5.24 95 10.1 6.6 0.12 2.29 4.33 4.99 4.10 0.25 3.38

U.S. High Yield

ICE BofA U.S. High Yield Index 6.56 97.0 7.07 286 4.7 3.0 0.40 3.98 4.97 8.55 7.87 5.11 5.40

BB Index 5.89 98.7 5.99 174 5.0 3.2 0.17 3.46 5.14 7.38 6.63 4.07 5.28

B Index 7.32 99.2 7.20 298 4.5 2.7 0.45 4.00 4.67 7.88 7.86 4.93 4.99

CCC Index 7.34 83.1 12.28 824 4.0 2.7 1.39 6.40 5.02 15.42 12.87 9.85 6.77

Morningstar LSTA U.S. Leveraged Loan Index S+3.29 97.4 8.34 417 4.5 - 0.88 3.27 3.71 7.50 9.24 7.22 5.24

BBB Index S+1.87 100.1 6.17 185 5.2 - 0.51 2.15 3.69 6.72 7.73 5.70 4.47

BB Index S+2.51 99.6 6.93 266 4.9 - 0.59 2.73 3.69 7.15 8.70 6.32 4.64

B Index S+3.53 98.2 8.41 422 4.4 - 0.97 3.45 3.81 7.98 9.85 7.55 5.57

CCC Index S+4.70 81.3 17.66 1343 3.4 - 1.50 5.68 3.25 5.60 8.34 8.67 6.25

D Index - 69.5 - - - - 3.15 -1.40 -14.81 -20.94 -25.23 -19.99 -17.91

Past performance is no guarantee of future results.

It is not possible to invest directly in an index. Source: Bloomberg, J.P. Morgan, ICE BofA Data Indices, LLC, Factset, and Leveraged Commentary & Data (LCD), as of 7/31/25. Data
provided is for informational use only. See end of report for important additional information. Yield to maturity is shown for the Morningstar LSTA U.S. Leveraged Loan Index. S+ refers to
SOFR (Secured Overnight Financing Rate) as the base rate. Loan Index spread represents the three-year discounted spread over SOFR.

The BEAT | August 2025 28

BONDS

Corporate Bond Market Update

Average Spread (bps) Current 1-Mo. Ago 12-Mo. Ago Median

1,200 HY Corporate 286 296 325 387

1,000 Loans 417 430 461 462

800 IG Corporate 76 83 93 115

Loans
600

400 High Yield Corporate

200

0 Investment
Grade Corporate

Annual Default Rate

8%
Current 1-Mo. Ago 12-Mo. Ago Median
6% HY Corporate 0.40 0.43 1.16 1.67
High Yield
Corporate Loans 1.11 1.11 0.92 1.42
4%

2%

Loans
0%

Past performance is no guarantee of future results.

It is not possible to invest directly in an index. Source: J.P. Morgan and Leveraged Commentary & Data (LCD), as of 7/31/25. Data provided is for informational use only. See end of report
for important additional information. Corporate spreads are in basis points and measure option-adjusted yield spread relative to comparable maturity U.S. Treasuries. Loan Index spread
represents the three-year discounted spread over SOFR (Secured Overnight Financing Rate).

The BEAT | August 2025 29

BONDS

Municipal Bond Market Update

Averages Total Returns (%)

Coupon Price Yield To Maturity Duration

(%) ($) Worst (%) (yrs.) (yrs.) 1-Mo. 3-Mo. YTD 1Y 3Y 5Y 10Y

Bloomberg Municipal Bond Index 4.64 99.1 3.98 13.3 7.0 -0.20 0.48 -0.55 0.00 1.54 0.13 2.11

AAA Index 4.59 100.0 3.81 12.9 7.2 -0.27 0.26 -0.70 -0.18 1.14 -0.38 1.67

AA Index 4.66 100.1 3.84 13.0 6.9 -0.14 0.57 -0.48 0.08 1.39 -0.07 1.91

A Index 4.63 97.4 4.24 13.5 7.0 -0.18 0.57 -0.45 0.07 2.08 0.62 2.54

BBB Index 4.62 93.0 4.81 16.8 7.9 -0.70 -0.04 -1.20 -0.64 2.20 1.17 3.06

5-Year Index 4.75 106.4 2.96 5.0 3.6 0.86 2.74 3.15 4.12 2.34 0.86 1.88

10-Year Index 4.60 103.5 3.71 9.9 6.2 0.11 1.63 1.15 1.61 1.80 0.37 2.35

22+ Year Index 4.71 91.8 5.02 26.7 11.5 -1.08 -1.75 -4.42 -4.08 0.35 -1.18 2.05

Bloomberg High Yield Municipal Bond Index 4.75 63.0 5.91 19.4 8.0 -1.51 -0.86 -1.83 -0.86 2.67 2.28 4.35

Hospital 5.35 66.4 6.26 20.7 7.5 -0.90 -0.47 -0.71 2.18 3.32 2.37 3.40

IDR/PCR 4.58 37.7 6.45 18.6 8.5 -1.53 -1.78 -2.85 -2.60 1.59 1.68 4.72

Tobacco 2.47 18.3 6.70 26.8 13.5 -2.51 -4.46 -5.69 -6.51 -0.43 0.07 5.86

Puerto Rico 3.59 52.5 5.06 18.2 8.6 -1.10 -0.13 -3.10 -2.65 2.47 2.31 5.92

Past performance is no guarantee of future results.

It is not possible to invest directly in an index. Source: Bloomberg, Morningstar as of 7/31/25. Coupon and Yield To Worst figures are based on average market prices while Price is based
on an average of par value. Data provided is for informational use only. See end of report for important additional information.

The BEAT | August 2025 30