Visual Description: The Truist logo on a purple background.

Visual Description: A panel of 4 Truist teammates at a large desk with Truist logo: Ocsarlynn Elder, Keith Lerner, Mike Skordeles, and Chip Hughey. A still image of a bull in a china shop on a screen behind panel. 

Visual Description: Oscarlyn sitting at desk in front of screen with text: "Annual Outlook 2025. A bull in a china shop."

Oscarlyn: Hello and welcome to Truist Wealth Economic and Market Insights Quarterly Livecast, with a focus on our 2025 market outlook. A bull in a china Shop. Thank you for joining us today.

Oscarlyn: I'm Oscarlyn Elder, co-chief investment officer for Truist Wealth.

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Text On Screen: Oscarlyn Elder, CFA, CAIA | Co-Chief Investment Officer

Oscarlyn: My team is responsible for selecting and analyzing the investment strategies that your Truist Advisor uses in creating your portfolio. Joining me is Keith Lerner, Co-Chief investment officer and chief market strategist.

Visual Description: Keith sitting at the desk looking to camera.

Oscarlyn: Keith and his team got Truist Advisors and clients through all market environments. They provide timely investment advice with the objective of helping clients achieve their long term wealth goals.

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Text On Screen: Keith Lerner, CFA, CMT | Co-Chief Investment Officer | Chief Market Strategist

Oscarlyn: His work is highlighted regularly in financial press, and you'll often see him on CNBC, Bloomberg TV and Yahoo Finance.

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Oscarlyn: Joining the discussion today is Mike Skordeles, head of U.S. economics.

Visual Description: Mike sitting at the desk looking to camera. A dark purple box slides in from the left.

Text On Screen: Mike Skordeles, AIF | Head of U.S. Economics

Oscarlyn: He's responsible for analyzing U.S. and global economies and financial markets.

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Oscarlyn: Chip Hughey, Managing director of fixed income, also joins us today.

Visual Description: Chip sitting at the desk looking to camera. A dark purple box slides in from the left.

Text On Screen: Chip Hughey, CFA | Managing Director Fixed Income Strategies

Oscarlyn: Chip's responsible for our analysis of fixed income markets and lead to our fixed income guidance. Both Mike and Chip are seasoned investment strategist

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Oscarlyn: and they appear frequently in the media.

Visual Description: Oscarlyn sitting at desk.

Oscarlyn: Before we start, let me say that our thoughts are with all of those affected by the devastating California wildfires. Now, let me turn to markets in the economy. For the second consecutive year, the S&P 500 returned more than 20%, posting a gain of 25% and handily beating global markets, as represented by the MSCI All Country World Index, which gained about 17.5% on the year. The strength of the US stock market was driven in large part by the transformative potential of generative artificial intelligence, a US economy that surprised to the upside, likely growing at more than 2.5% for the year, and the expectation that the new administration would enact market friendly policies. Turning to interest rates and yields, the fed moved three times to reduce the fed funds target rate to 4.5%. The ten year Treasury yield finished the year higher, as bond investors really grappled with the potential impacts of a stronger than expected economy and the new administration's possible fiscal expansion. So with all of that, Keith, before we jump into our 2025 outlook, which we're going to focus on a lot today, 

Visual Description: Keith Lerner sitting at the desk looking towards Oscarlyn.

Oscarlyn: our tactical positioning in 2024

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Oscarlyn: was really aligned with the major movers within the market.

Keith: Yeah. Well great to be with you. Thanks everyone for joining us.

Visual Description: Keith Lerner sitting at the desk talking to other panelist.

Keith: And always great to be in studio with Mike and Chip as well. So, youre right, ya know, we follow a weight of the evidence approach.

Visual Description: A white screen appears with title: 2024 was dominated by U.S. and large caps, our favored areas. Below title is a bar graph of 2024 performance summary. U.S. large cap at 25%. U.S mid cap at 13.9%. U.S. small cap at 8.7%. International developed at 3.8%. Emerging markets at 7.5%. Truist Wealth logo in bottom left corner.

Text On Screen: Truist Advisory Services, Inc. | Data sources: Truist IAG, Morningstar | U.S. large caps = S&P 500, U.S. mid cap = S&P MidCap 400, small cap = S&P SmallCap 600 | International developed = MSCI EAFE, Emerging markets = MSCI IEM | Past performance does not guarantee future results.

Keith: And when we sat here last year some of our key themes was being team USA. So having an equity bias that was primarily biased towards the US and also, focused on large caps relative to small caps. And what we saw over the last year is large caps dominate partly because of that AI and technology that you mentioned. In fact, just in a couple interesting stats, is that the US outperformance relative to international and large cap outperformance relative to small caps was the greatest that we've seen since the late 90s. A common theme was something you mentioned already. The US economy was stronger than than many expected and stronger than the globe. And then again, the large cap indices have a lot more technology. International markets tend to have less. Yeah.

Ocsarlyn: And we were positioned to be able to take advantage of that. 

Keith: Exactly. Yeah.

Ocsarlyn: So let's turn to the 2025 outlook.

Visual Description: Screen splits of page with bar graph is on the left side of the screen and video of Oscarlyn is on the right side of the screen. 

Ocsarlyn: And let's talk about the title A bull in a china shop. I know you loved this title. So tell folks what it means to you.

Visual Description: Still in split-screen of page with bar graph, Keith now seen on right side of the screen.

Keith: Yes, it really does resonate in our view. Hopefully it does for our clients as well.

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Keith: I think the first aspect of this is the bull.

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Keith: We still think the bull trend is in place, right? We want to be aligned with that primary uptrend that's still in force, but we also expect there's gonna be some disruptions along the way. We have a lot of policy outcomes that are unknown. And some things are going to be likely broken along the way. So we're balancing, you know, the optimism that we have on the economy, which Mike, will talk about also with a view that there will be further gains in this market, but we certainly expect it to be a bumpier path. And from our perspective, that actually isn't necessarily a bad thing, because it will provide opportunities for us to capitalize along the way. So primary trend up somewhat of a bumpier path.

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Ocsarlyn: All right. And that kind of is the bull in a china shop in a nutshell. And then I think you also have noted that it it gives a nod to geopolitical.

Keith: And it does. And also specifically the china part,

Visual Description: Keith sitting at the desk talking to Oscarlyn.

Keith:it is a kind of a wink and a nod towards the strategic battle

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On Screen Text: "A bull in a china shop | Stay aligned and anchored with the primary uptrend trend | balance optimism with potential disruptions"

Keith: that we continue to have with the US versus china. We're already hearing about it on the tariff side, and that's going to only increase as the year progresses.

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Ocsarlyn: We want our viewers to know that we look at all the questions that they submit when they register. I think we had over 200 questions this time and we categorized them.

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Ocsarlyn: A lot of the questions center around what is your tactical positioning? So how are you positioning for kind of the intermediate term within portfolios? I think we decided to do this up front to make sure folks know. So if you'll just talk to them.

Visual Description: Keith sitting at the desk talking to other panelist.

Keith: Sure, we're going to get into more detail about all of this. But up front, just so we don't bury the lead, so to speak, 

Visual Description: A white screen appears with title: House Views - Tactical preferences entering 2025. A dot graph show how more or less attractive primary asset classes, global equities, and fixed income options are. Of Primary Asset classes equity is more attractive, fixed income is neutral, cash is less attractive. For Global equities U.S. large cap is most attractive, U.S. mid cap is more attractive, U.S. small cap is neutral, international dev markets and emerging markets are less attractive. For Fixed income U.S. government is more attractive, U.S. investment grade corp is less attractive, U.S. high yield corp is least attractive, duration is neutral. U.S. sector preferences are technology, communication services, and financials. 

Keith: up front, our tactical view, which is again, as a starting point as we enter the year, is that we still have an emphasis on equities relative to fixed income and cash. And then when we look at the global equities side, we're still team USA. We still think that theme resonates throughout this year. We still have an emphasis on large caps where those big tech things are still one thing we did late last year as we upgraded our view of Mid-caps, which we'll talk about later on as well. And then still underweight international stocks. And then Chip will talk more about the fixed income side where we've seen this reset in yields. We're still focused on high quality. And then maybe one final point more on the sector side. We have a lot of questions on what sectors do you like? Well, throughout last year we were we had a preference for technology communication services. We still do. Every bull market has a key dominant theme and the dominant theme of this bull market is still AI. And those areas should continue to benefit. We also though are positive on financials. If you have a resilient economy, deregulation, maybe a pick up in M&A, that should also benefit financials as well.

Visual Description: Oscarlyn sitting at the desk talking to other panelist.

Oscarlyn: Thank you. Thank you Keith. And now we're going to move over to Mike and talk about the economy. Investors are always focused on the economy. And we got a lot of questions. 

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Oscarlyn: I think it was our number two category as far as questions that came in. Our key economic theme is 

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Oscarlyn: steady growth on shifting ground. 

Visual Description: Mike sitting at the desk nodding at Oscarlyn.

Oscarlyn: So with that 

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Oscarlyn: kind of as background, how would you describe the current global landscape?

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Mike: So it fits both for the US and for the globe. But that steady part 

Visual Description: Mike sitting at the desk answering Oscarlyn.

Mike: of the global economy we think is going to remain largely steady. But when you look under the covers, the US is going to outperform. And that's this notion of US exceptionalism 

Visual Description: A white screen appears with title: U.S. exceptionalism should continue into 2025 and beyond. A line graph shows change in real gross domestic product from 4Q 2019 to 2024 between the U.S., Eurozone, Japan, and the U.K. The chart shows the steady growth of all four groups with the U.S. with the highest growth from 2020 to 2024.  

Text on Screen: Truist Advisory Services, Inc | Change in real gross domestic product (4Q indexed at 100) | Data sources: Truist IAG, Haver, Real (inflation adjusted) gross domestic product, indexed to 4Q2019.

Mike: that the US is going to continue to outperform the major parts of the world, primarily Europe, Japan and the United Kingdom. And that's what this slide is, is clearly showing. Additionally, not just our expectation, but consensus expectations both for the US continue decline, but also Europe continues to taper or fall. So there's this growing gap between the US and the rest of the developed world. And we think it's going to continue not just in 2025 but beyond.

Oscarlyn: Yeah. So this bifurcated state with international developed being weaker 

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Oscarlyn: than the US, we think continues to be a key trend there. Let's turn and go deeper into the U.S.. 

Visual Description: Oscarlyn sitting at the desk talking to Mike.

Oscarlyn: And what specifically are we looking for out of real GDP as we look to 2025?

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Mike: So we expect economic growth of about 2.5% for 2025.

Visual Description: A purple box comes in from the right side.

Text on Screen: Economy - Ready growth on shifting ground | U.S. growth expected to near 2.5% |. Consumer remains key driver | Policy outcomes remain wide

Mike: It's a touch below where it was in in 2024. But that's still very solid and certainly again outperforming the rest of the world. It's mainly driven by the consumer which ultimately is all about jobs. So 160 million Americans have jobs. That's more than we've ever had. And additionally, we continue to see pretty strong growth there, on the jobs front. So more money in people's pockets because more people are working, drives more consumer spending, which ultimately drives that, the, the overall economy, because at the end of the day, two thirds of the US economy is consumer spending.

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Oscarlyn: Yeah. And so with that, as we look out to 2025, where do you think like monthly job growth or loss 

Visual Description: Oscarlyn sitting at the desk talking to Mike.

Oscarlyn: will land? What are your expectations there?

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Mike: So a little bit cooler than we were in 2022 and 2023. But we expect about 150,000 per month, which is historic, which historically is pretty average but not weak. And I think that's the main takeaway is that it's cooling from those stronger years, but certainly not weak.

Visual Description: Oscarlyn sitting at the desk talking to Mike.

Oscarlyn: Yeah. And so Mike, you've mentioned the strength of the consumer. The consumer still has jobs, right. We expect there to be continued job expansion as we move into 25. What other factors what other key drivers are you looking at to fuel that 2.5% ish type of real GDP growth?

Visual Description: Mike sitting at the desk answering Oscarlyn.

Mike: So more people with jobs is one piece? 

Visual Description: A white screen appears with title: Wages are growing above inflation, helping consumers. A line graph shows the average hourly earning (year-over-year change) between average hourly earnings and Consumer Price Index from 2021 to 2024 with a dotted line to show the 2.4% pre-pandemic 10-year average for earnings. Consumer Price Index peaks around 9% in 2022 and falls to 2.7% by 2024. Average hourly earnings steadily decrease from 6% in 2022 to 4% in 2024.

Text on Screen: Truist Advisory Services, Inc. | Data sources: Truist IAG, Bloomburg, Bureau of Labor Statistics, monthly data through November 2024

Mike: Yeah, but higher wages for those people working is an additional piece. So wages continue to grow faster than inflation. That's what this slide is showing. Again inflation the rate of change is continuing to taper lower. 

Visual Description: Screen splits of page with bar graph is on the left side of the screen and video of Mike is on the right side of the screen. 

Mike: And we're seeing that steady wage growth. This is an important piece of the pie because again the fact that it's continuing to maintain the trend that we've been on really for the last couple of years. The other piece that I think isn't getting as much play, certainly in the financial press, among other places, when we crossed into 2025 here, 21 states increased their minimum wage. Yes, that only impacts about a million people, but it does have a bit of an upward pressure for the rest of hourly employees. Additionally, as we get through the year, there'll be several more states that have increases to minimum wage. So all told, we'll get about half the states are going to have a minimum wage increase

Visual Description: Oscarlyn listening to Mike. 

Mike: as we move through into the full year of 2025.

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Mike: The other thing that I think, is important to point out is 

Visual Description: Mike sitting at the desk answering Oscarlyn.

Mike: that a driver the last few years, manufacturing has been weak. It's stabilizing. We think that's going to be modestly additive. So one of the negatives that we saw in 2023 and 2024 is going to be a positive, albeit modest but positive in 2025. That said, even though rates are bouncing around, housing is still going to be a bit of a drag. So that one's not going to add, but we don't think it's going to be a big detractor as well.

Visual Description: Oscarlyn reacting to Mike. 

Oscarlyn: Yeah. Thank you for detailing that. For folks who like at the end of the day, wage inflation being higher than overall inflation is a good thing. 

Visual Description: Mike nodding to Oscarlyn. 

Oscarlyn: We think should help should help, sustain spending. 

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Oscarlyn: And then you noted the modest improvement in manufacturing helps to drive it as well.

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Oscarlyn: And housing just continues to be on the negative side of the ledger.

Visual Description: Mike reacting to Oscarlyn. 

Mike: Yeah. The other one too is optimism. Certainly from consumers. But we've also seen it in a big way, especially with small businesses. In fact, this morning we just got the latest, reading on small business optimism. It hit its highest level since 2018. So we're going a little bit back in our time machine as far as optimism that that's going to also offset some of these negative like tariffs and uncertainty.

Visual Description: Oscarlyn speaking to panelist.

Oscarlyn: Yeah. Well let's turn. You mentioned tariffs. Let's turn to DC. We spent a lot of time and 2024 talking about elections and and potential outcomes and potential impacts. Now there's this really discussion around our really wide, vast policy agenda, whether it's tariffs, taxes, immigration, deregulation there's just a lot that that's on the table potentially as we move deeper into the year. How are you assessing those factors and how do they influence your outlook?

Visual Description: Mike answering Oscarlyn. 

Mike: So that shifting ground piece of the economic theme is because of this uncertainty. And as much as people want to talk about a red wave and Mark Oesterle, our DC insider,

Visual Description: Split screen with purple background shows an information slide on the left side of the screen and Mark at the desk on the right side of the screen. The slide is titled: Slimmest U.S. House majority in 94 years. A bar graph shows the U.S. House majority by party (number of seats) from 1913 to 2025. Graph emphasizes that the 2 seat Republican majority is the smallest majority since 1931.

Text on Screen: Truist Advisory Services, Inc. | Data Sources: Truist IAG, Bloomburg, US House of Representatives Office of the Historian. Majority as of the first day of new Congress. Excludes third parties. 

Mike: when we were at our October call, talked all about how there's a lot of uncertainty and the makeup of Congress is is really going to be important after the election, despite this talk of a red wave. It's been extremely tight. So the slimmest majority in the House for either party going back to 1931, that's going to make essentially everything a battle, 

Visual Description: Slide comes fullscreen. 

Mike: which ultimately slows things down. So anything that's going to require legislation, things like the tax changes and others are going to be bogged down with this very slim majority in Congress.

Keith: So if I just can jump in for a second. Going back to our theme, the bull in a china shop, 

Visual Description: Keith at desk talking to panelist.

Keith: Mike just mentioned everything's going to be a battle. And when there's uncertainty around different things getting passed, that injects uncertainty in the market and then volatility again, from our standpoint, volatility is not a negative because it may provide opportunities. But this chart is really a key feature of why we think it's going to be somewhat of a bumpier path. Because everything will be a battle.

Oscarlyn: Will be a battle. 

Visual Description: Oscarlyn reacting to Keith. 

Oscarlyn: And perhaps along those lines, let's talk about taxes.

Mike: Yeah.

Oscarlyn: Yeah.

Mike: So we think that the 2017 

Visual Description: Mike answering Oscarlyn. 

Mike: tax cuts get extended. That's the good news. The offset or the the have to wait for it is this battle that's gonna go on in Congress means it's likely to get delayed, and it's likely not to happen as quickly as people expect. Additionally, as Mark mentioned in October, everything's on the table. It's also not likely to be a ten year extension of those tax cuts. It's likely to be more of a perhaps 4 or 5 or 6 year extension, something more intermediate and not a long term extension or making it permanent. So that's a function of these very tight majorities in Congress.

Visual Description: A dark purple box slides in from the left.

Text On Screen: Mike Skordeles, AIF | Head of U.S. Economics

Oscarlyn: And certainly we’ll keep folks updated and their advisors will keep keep them updated as well as we move throughout the year and 

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Oscarlyn: have more clarity on what happens there. Let's talk about deregulation, 

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Oscarlyn: an area that doesn't need legislative action.

Mike: Yeah

Oscarlyn: Mostly.

Mike: Yeah. 

Visual Description: Mike answering Oscarlyn. 

Mike: For the most part, it's driven by the executive branch. So that's the White House and the various departments, within the executive branch, talking about how they're going to change or how they're going to approach different things. That's one of those reasons why I mentioned small business optimism. And business optimism generally, is that their expectation is that regulation or deregulation is going to be, more of a push. I would use, although for the most part, as Mark talked about and we've repeatedly mentioned, we wouldn't use Trump 1.0 is a roadmap for what's going to happen during Trump 2.0. A lot of different factors are, decidedly different. That said, one thing that happened during Trump 1.0 that we think is is likely to repeat is they didn't add a lot of new regulation. It wasn't that they rolled back many different regulations. Is it that they didn't add many new ones. And that lets a lot of businesses small, medium, large to just digest what's already been done and not have to change, constantly, which is seemingly what's happened with a lot of different businesses.

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Oscarlyn: Yeah. Let's maybe turn the coin and talk about tariffs.

Mike: Yeah.

Oscarlyn

And what are we expecting there and perhaps when.

Mike Yeah. So the not to bury the lead, 

Visual Description: Mike answering Oscarlyn. 

Mike: we do think that there are going to be tariffs. We also think because it doesn't take legislative action that it's likely to happen quicker, that it's, you know, take whatever you will. That's an opportunity for some and a challenge for others. But I think it's important to understand the on what so what goods are going to be tariff and

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Mike: and how much. I think it's going to be a lot less than people anticipated at the end of the day. They're likely to be very targeted. But lastly, I would say again, it's important to take a very objective, 

Mike: Mike still answering.

Mike:lean back, zoom out, sort of approach of what was the campaign rhetoric versus what's the reality? And so going after some of our closest allies is probably more of a negotiating ploy rather than something that they honestly want to increase a bunch of taxes, or, I'm sorry, tariffs, against the Canadians, or the Mexicans, which are two largest trading partners. It's like more likely that that's some sort of negotiating stance, to get other things accomplished that the administration wants to get done.

Visual Description: Ocsarlyn nodding at Mike and reacting to Keith's interjection.

Keith: Can I just add another point again, if you don't mind? 

Visual Description: Keith reacting to Mike's answer.

Keith: So what you just talked about is kind of a microcosm of what we're seeing in the markets. In November, after the election, the market focused on the positive or perceived positives, deregulation 

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Keith: potentially extension of taxes. And then in December, they focus on some of the other things, the uncertainty around the tariffs. And, and then, and then when the taxes are going to be extended. So that's kind of what you can expect as a microcosm, we think for this year.

Oscarlyn: For this year. Yeah. And to recap, Mike, 

Visual Description: Ocsarlyn responding to Keith.

Ocsarlyn: again, expectations for 2025 for U.S. growth, steady growth of about 2.5%.

Visual Description: Mike nodding at Oscarlyn.

Oscarlyn: If folks are wondering kind of what the bottom line

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Oscarlyn: expectation is for the year. So thank you Mike. And now we're going to turn to Chip and Chip 

Visual Description: Chip nodding at Oscarlyn.

Oscarlyn: fixed income has kind of been the topic of the day the topic of the year. 

Visual Description: Oscarlyn talking to Chip.

Oscarlyn: Maybe the topic of the last quarter really. And Mike has talked about a variety of wide possible outcomes here regarding tax policy, deregulation, tariffs. So we've already talked about that. But that's having an impact on interest rates and expected fed policy. So with that our key theme for the year within fixed income is solid foundation.

Chip: Right.

Oscarlyn: Can you provide some context for that theme kind of given given what we've talked about already.

Visual Description: Chip answering Oscarlyn.

Chip: Yeah. Solid foundation, I think. I think a good starting point is that 

Visual Description: A dark purple box slides in from the left.

Text On Screen: Chip Hughey, CFA | Managing Director Fixed Income Strategies

Chip: yields are among the highest levels that we've seen in almost two decades. And that really matters for for, you know, really for two reasons. Providing that that reliable stream of income but also portfolio stability, 

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Chip: that income is important for the diversification benefits in fixed income 

Visual Description: Chip answering Oscarlyn.

Chip: and it's in a better position to deliver those. 

Visual Description: A purple box comes in from the right side.

Text on Screen: Fixed income - Solid foundation | reset higher in yields provides improved starting points | expect bonds to deliver solid income | volatile rate environment to persist

Chip: And then you turn to the performance side of the equation. And 80, 85% of long term fixed income performance is driven by the income, not these day to day fluctuations in interest rates, but the income. So that's a very big deal. So this reset that we have seen in yields has restored some value in duration. And I'm sure we'll touch on a little bit more. But really that sort of 3 to 10 year part of the of the yield curve 

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Chip: with these elevated yields, a little bit less interest rate sensitivity. It's this has been a very helpful to get to that better starting point 

Visual Description: Chip answering Oscarlyn.

Chip: that helps forward looking returns.

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Oscarlyn: So Chip, with that we we've seen the movement up in yields that occurred. And I think folks right now on their screen can see the ten year Treasury and actually see that movement 

Visual Description: A white screen appears with title: Restored value in intermediate bonds. A line graph shows 10-year U.S. Treasury yield from December 2022 to December 2024. Graph highlights significant growth in value from September 2024 to December 2024.

Text on Screen: Truist Advisory Services, Inc. | Date sources: Truist IAG, Bloomberg. | Past performance does not guarantee future results. 

Oscarlyn: in kind of that purple call out, what do you think the trading range will be for the ten year Treasury as we move forward in 2025?

Chip: So our our internal framework would suggest that a natural equilibrium for the ten years is anywhere from 3.75, 4.5% being on the upper end. We've shot through that. We're at about 4.8%. You know, as of as of this morning, we would consider that a bit of an overshoot to, to fair value. That is a tactical opportunity, potentially, that has restored value, in duration. And to add a little bit of exposure duration, something a little bit longer dated exposure for portfolios. Because we see this all the time, we see a lot of portfolios that are very, very concentrated in the front end, very front end, very short dated securities and cash. Not saying to abandon those yields are still productive there. They make a lot of sense for, for a lot of investors. But for those that can take on a little bit more interest rate volatility, locking in for a bit longer, you can complement those with just a little bit a little bit longer exposure. And again three to 3 to 10 years is that nice risk reward balance we think for interest rate volatility being a little bit more limited or mitigated.

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Chip: But also there's elevated yields you can lock in for a longer period.

Oscarlyn: Yeah. So part of your message is, 

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Oscarlyn: folks need to understand that there has been this shorter term movement and interest rates. It may be a good time to look at their portfolio and look at the fixed income sleeve. And I think we'll double click more into that in just a few minutes. But I want to make sure people hear that part of the message. 

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Oscarlyn: We're looking at the ten year again. So folks just saw it on their screen. And we've got another version 

Visual Description: Oscarlyn reacting to Chip.

Oscarlyn: of the ten year. Up on the screen as well. There's something unusual about the environment that we're in, because typically you wouldn't see the ten year move up

Chip: Right.

Visual Description: A white screen appears with title: Rising yields are defying the typical reaction to Fed rate cuts. A line graph shows the 10-year yield change around the first Fed cut comparing the average of all cut cycles and the those in 2024. The vertical axis is -1.5% to 2.5%. The horizontal axis is trading days from first Fed rate cut from -100 to 500. The graph emphasizes the significant increase in yield after the first rate cut of cycle.

Text on Screen: Truist Advisory Services, Inc. | Date sources: Truist IAG, Bloomberg. Previous 9 rate cut cycles date back to 1976 | Past performance does not guarantee future results. 

Oscarlyn: In the face of fed, cutting interest rates.  So what's going on here? Why is this happening?

Chip: It's the number one question we've gotten since September is what is going on? I thought the fed was cutting rates. And it is unusual, if you go back to the last nine times that the fed was cutting rates, you typically see yields pretty, pretty consistently falling over the course of the next two years. And obviously we have seen basically the exact the exact opposite there. It's it's really the policy uncertainty that we'll touch on here in a bit that is, that is driving that move to, to to higher yields. If we go back to September, you know, the fed was cutting at a time when inflation was cooling a little bit. There were signs that that growth in the US was moderating from a really strong place, but moderating a bit that gave that gave the fed confidence to begin, you know, cutting rates at the end of at the end of last year, that's been recently a little bit more disruptive. We've seen in sometimes in a good way. You really you know, it's been disrupted by the fact that the economy continues to perform very well, displaying that resilience that that Mike just laid out. We got some stickier, inflation readings that that gave the fed, you know, a bit of pause. And then the fed, by its own admission, says 

Visual Description: A white screen appears with title: Investors demand greater compensation for higher uncertainty. A line graph shows 10-year U.S. Treasury yield term premium from 2014 to 2024. Graph shows the 10-year average at -0.4. The Treasury yield term premium fluctuates over across the graph with a highlighted spike at the end of 2024.

Text on Screen: Truist Advisory Services, Inc. | Data sources: Truist IAG, Bloomsbury | Past performance does not guarantee future results.

Chip: we're not really sure where fiscal policy is headed. We kind of need to consider that as well. All of this has led to a more of a gradual expected fed rate cut path in 2000, in 2025.  

Visual Description: Chip answering Oscarlyn.

Chip: But really, when you look at it, that's been the smaller story. It's been more about, something else which we'll talk about that's really about the policy uncertainty.

Oscarlyn: Yeah. So that 

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Oscarlyn: policy uncertainty, the uncertainty bucket you're saying has really driven.

Chip: Yes.

Oscarlyn: What we've seen happen with the ten year

Chip: That's exactly right

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Oscarlyn: And that policy bucket is capturing the uncertainty around tariffs, the uncertainty around taxes, the uncertainty around like what the budget looks like, 

Visual Description: Oscarlyn reacting to Chip.

Oscarlyn: how much debt we have to issue, the debt ceiling. All of that is getting reflected.

Chip: That's exactly right

Oscarlyn: into this uncertainty bucket. And I think you've got a great 

Visual Description: Four panelist sitting at the desk. 

Oscarlyn: analogy that you would like folks to hear and hopefully captures 

Visual Description: Chip nodding at Oscarlyn.

Oscarlyn: what's going on there.

Chip: Yeah, the what we've been kind of saying is if you were the captain of a ship, would you expect the same compensation to go across a nice, calm, smooth lake where you can see the other, the other shoreline the entire time?It's a short trip. Would you would you expect the same compensation there as if you were traversing the Atlantic Ocean? Right. Much longer, much riskier. You would expect more compensation for the more unknowns. And risk of that, longer of that longer trip. And so that's kind of what bond investors are saying is we don't know fully what we don't know yet. And that is driving up what is the fancy word for it is term premium. But it's really that uncertainty bucket. 

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Chip: It's simply what do fed expectations and inflation not explain. And that has been that has been 80% of the move in yields that we've seen a little bit more than 80% since mid September and really closer to all of it since, call it early December.

Oscarlyn: Yeah.

Chip: Yeah.

Visual Description: Oscarlyn reacting to Chip.

Oscarlyn: So with that, we've seen this notable increase in rates

Chip: Right.

Oscarlyn: and yields.

Chip: Right.

Oscarlyn: Specifically what keeps them from going higher. Like why why do you think this maybe stays contained?

Chip: I do think we find a little bit of stability soon. And I think that one of the main reasons is that the magnitude and 

Visual Description: Chip answering Oscarlyn.

Chip: pace of this move in yields, over the course of the past several months, it has been pretty extreme. And so even if you look at it from a trading or technical standpoint, we're getting to stretched levels where typically you get a bit of a reprieve and yields tend to come down because the move has been has been very hot. I do think that what's up, what's the next chart that we're showing is really arguably maybe the most powerful reason why we think that that from here 

Visual Description: A white screen appears with title: Powerful offset to runaway rates = International demand. A line graph shows the yield differential between 10-year U.S. Treasury yield and G-7 peers from 2020 to 2024. The graph shows the average from 2010 to 2019 set at around 0.6%. The yield differential dips to it's lowest at around 0.1% in early 2020 and a steady increase to around 1.5% at the end of 2024.

Text on Screen: Truist Advisory Services, Inc. | Data sources: Truist IAG, Bloomburg | Foreign holding data, through 10/31/24 | Past performance does not guarantee future results.

Chip: the upward moves maybe, maybe somewhat, capped or at least dampened a bit and that is that U.S. yields are, are at their highest levels relative to our international developed peers that we've seen since 2019. The U.S. is out yielding virtually all of our all of our developed peers. That is creating a tremendous amount of demand for U.S. debt from overseas. And it's particularly true in Europe and Japan where the economies are slower, their yields are much lower. We expect that to continue. And when we see that we see yields, we'll just use the ten year. When we see the ten year drift higher from four and a half to four and three quarters to, you know, do we flirt with 5% that that foreign demand from overseas really accelerates? And when that happens that keeps its upward yield moves because that means prices. You know, that prices are improving with that demand. It keeps them in check. 

So that's a very powerful force that we're watching really closely.

Visual Description: Oscarlyn reacting to Chip.

Oscarlyn: Right. So we're watching the international demand thinking that that'll be part of what keeps yields from moving higher.

Chip: Right.

Oscarlyn: That's really important. 

Visual Description: Four panelist sitting at the desk. 

Oscarlyn: You've already foreshadowed this a little bit I think in your comments a few minutes ago. 

Visual Description: Oscarlyn speaking to Chip.

Oscarlyn: But given this change, given what we've seen happen with yields, you know, in the last quarter, how do you think investors should be positioned within fixed income?

What do you want them to think about?

Visual Description: Chip answering Oscarlyn.

Chip: Right. I would just I would say that for those that are have been positioned for a long time in cash, very, very, very short, you know, 

Visual Description: A white screen appears with title: Sharp increase in yields has restored value in intermediate bonds. A line graph shows 10-year U.S. Treasury yield from December 2022 to December 2025. The graphic highlights September 2024 had Duration - less attractive around 3.6%, November 2024 had Duration - neutral around 4.3%, and December 2024 Duration - more attractive around 4.7%.

Text on Screen: Truist Advisory Services, Inc. | Data sources: Truist IAG, Bloomberg | Past performance does not guarantee future results.

Chip: fixed income instruments, money market funds, etc. again, still productive, still attractive and make a lot of sense and obviously have very low interest rates sensitivity. But we do think that as we've seen these this really aggressive move higher in yields, that there is an opportunity to add a little bit of longer dated exposure, which is means a little bit more duration to to complement those, because effectively, what we're doing when we when we move into longer duration is locking in these yields over a longer horizon. And those have elevated a bit, I would say in a broader context, because I want to be clear on this. We also still would recommend not going beyond neutral, if you will, of sort of where our benchmarks are. We, you know, we would stick we would stay neutral. This point, acknowledging policy uncertainty is going to continue to create outsized interest rate volatility. But again, we we like the fact that some of that exposure is mitigated there in shorter and shorter part of the curve. And then from a credit standpoint, Keith mentioned, Keith mentioned it as well, that we would still continue to emphasize quality. We think that we're going to see tactical opportunities 

Visual Description: Chip talking to panelists.

Chip: in riskier fixed income. But for new investment, that compensation over really high quality fixed income is still very, very narrow. It's perform very well. It's it's done very well. Investment grade and high yield corporate for instance have done well since a very positive economic signal that the economy continues to perform well. 

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Chip: It's a little different narrative from an investment standpoint in our view. As far as the risk reward in stepping in there now, we would be patient and we'll be communicating those opportunities as they arise.

Keith: Oscarlyn, just looking at this chart reminds me when we talk about Mark Oesterle, you know, quarterly that, 

Visual Description: The graph of "Sharp increase in yields has restored value in intermediate bonds" comes fullscreen.

Keith: you know, we come to next next this year. And Mike's chart on how slim the margin in the House is, is that the bond market was going to limit on how much things can get done. So this move up already, we're seeing changes from the administration based on this move up as far as even 

Visual Description: Keith reacting to Chip.

Keith: a discussion around tariffs. So the bond market is really going to be probably the key story for the next year.

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Chip: Agreed.

Oscarlyn: Yeah. And our message there is 

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Oscarlyn: again we've had the reset higher yields. You think it's an opportunity for folks to look at their fixed income. We call it a sleeve with a portfolio. The portion the allocation within the portfolio. 

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Oscarlyn: Just understand where you're positioned.

Oscarlyn: Talk to your advisor and see if perhaps there's an opportunity to lengthen or draw out that duration just based upon the opportunity that's here. And then we continue. We got a number of questions about this, 

Visual Description: Oscarlyn talking to Chip.

Oscarlyn: about going into high yield. And our advice continues to be to lean into quality. You're not getting paid enough, especially on new investment, to go into high yield at this juncture. And then Chip, you're also expecting that we're going to have 

Visual Description: Chip nodding at Oscarlyn.

Oscarlyn: increased interest rate volatility as we move through the year. There may be lots of push and pull 

Visual Description: Oscarlyn talking to Chip.

Oscarlyn: on the yield as we move.

Chip: Absolutely. 

Visual Description: Chip answering Oscarlyn.

Chip: That's been that's been the story really for for more than a year is that if you look at the long term averages of interest rate volatility, it's it's well above average. And for all of the reasons that we've just discussed it, especially as we get more, it'll be it may calm down a bit when we get a little bit of policy clarity.

Oscarlyn: Right.

Visual Description: Four panelist sitting at the de

Chip: We're just not there yet.

Oscarlyn: And so we don't know how long that's going to take.

Chip: That's right.

Oscarlyn: We'll probably have some clarity on tariffs pretty soon after

Chip: Pretty quickly.

Oscarlyn: Inauguration.

Mike: At least some.

Oscarlyn: At least some will have some clarity fairly quickly. 

Visual Description: Mike nodding at Oscarlyn.

Oscarlyn: But on taxation 

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Oscarlyn: and some other issues, it's going to take a while before we have that clarity. All right. Thank you Chip.

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Chip: Thanks.

Oscarlyn: Keith. I'm gonna turn back to you. We're going to talk about stocks. We, look 

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Oscarlyn: we gotta give Chip his day in the sun, you know, 

Visual Description: Four panelist sitting at the desk. 

Oscarlyn: it's not often that we're able to talk like this much about fixed income.

Keith: It's been all about yields. So it's fair.

Oscarlyn: It's completely fair. But we're going to turn back and talk about stocks. 

Visual Description: Oscarlyn talking to Keith.

Oscarlyn: And again your key theme which we've talked about already is a bull in a china shop. And your work is suggesting further upside, but it's going to be this bumpier path. And, you know, one of the questions that that we have is, okay, why is there so much upside after we've had two years of gains of more than 20%? So where is that coming from?

Keith: Yeah, I would just clarify, I we're not seeing 

Visual Description: Keith answering Oscarlyn.

Keith: so much upside. I’m not expecting

Oscarlyn: More. More upside.

Keith: More upside 

Visual Description: Four panelist sitting at the desk. 

Keith: further upside. So if we take a step back, we've used this word a couple times today. 

Visual Description: A split-screen with a line graph on the left side titled: Stock returns over the last three years are not extended. Keith talking at desk is on right side of the screen. The line graph shows the S&P 500 3-year rolling price return from 1954 to 2024. A line across the graph shows the average over time is 31%. The graphic shows many peaks and dips of the 3-year rolling price return through the years, highlighting 2024 at 26%. 

Text on Screen: Truist Advisory Services, Inc. | Data sources: Truist IAG, FactSet | Past performance does not guarantee future results.

Keith: The weight of the evidence. Let me kind of walk you through some of the things that we're looking at. The first thing is a historical context. Where are we in this bull market cycle. So we're up about 70% over the last roughly two years. Historically, when we studied the last ten bull markets, eight of the ten of the previous, eight of the previous ten bull markets have lasted longer and have been stronger than the current. So just as a historical lens, as starting point, then the other thing to think about is, even though we've had these really two big up year, you have to remember 2022 was a very difficult year. We were down about 20%. So the chart you're looking at now looks at the three year rolling return for the S&P. And what you can see there is that currently we're basically around the long term average. We're not that extended because if you stack on the loss of 2022 and then the 2.20% gain years, we're back to average. So certainly more mature, right? Expectations should come back in. But, the historical bull market suggests more upside. And then, you know, Mike talks about the economy early being resilient majority of the time, if the economy is an expansion that supports corporate profits and that ultimately drives a bull market. And then thirdly, we're also looking at, the technical trends, the price trend, the underlying price trends of this market. As of right now, the uptrend is intact. So we look at the historical analysis. The economy's still in gear fundamentally earnings moving up. And then the technical still being aligned, that still suggests some upside over the duration of this year driven by earnings.

Oscarlyn: Driven by earnings.

Visual Description: Still in split-screen with the line graph on the left side, see Oscarlyn reacting to Keith on right side of screen.

Oscarlyn: So that is kind of the positive side of the coin.

Visual Description: Fullscreen, Keith nodding at Oscarlyn.

Keith: Yeah.

Visual Description: Oscarlyn reacting to Keith.

Oscarlyn: Right. What's leading to the bumpier path. And I think you've already foreshadowed right. The the policy.

Visual Description: Four panelist sitting at the desk. 

Keith: It's all Chip’s fault. If he can keep interest rates contained that should be fine.

Visual Description: Chip smiling at Keith. 

Keith: But it's not a coincidence, 

Visual Description: Four panelist sitting at the desk. 

Keith: that the stock market actually peaked the S&P 500 back in December.

Visual Description: Keith answering Oscarlyn.

Keith: That was the same time where interest rates troughed. And it's that aggressive move up. So the bumpier path is we're going to see some of the uncertainty reflected in the interest rate market. That's more competition for stocks. I think already with the wider policy outcomes as well. And I think also importantly is markets are all about expectations. And coming in late last year we saw investor expectations skyrocket. So what does that mean. That bar for positive surprises is lifted and it's easier to disappoint. So I think those are the factors that suggest maybe a more modest move higher overall for the market and a bumpier path. But I want to be clear, we still are aligned with the primary uptrend that we still think has further to go.

Visual Description: Oscarlyn talking to panelists.

Oscarlyn: Let's talk about valuation. Our advisors and look when we're out on the road, valuation is probably one of the questions that comes up all the time.

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Oscarlyn: And so on the S&P 500 forward-year P/E is about 21 times. 

Visual Description: Oscarlyn talking to Keith.

Oscarlyn: Is that P/E justified? How do you feel about it. Like give us context on the valuation.

Visual Description: Keith answering Oscarlyn.

Keith: I'll give you the evidence.

Oscarlyn: Give us the evidence.

Keith: So I think the first thing you would say is that relative to history, valuations are elevated. That's fine. I think from a one year forward look, look I look forward based on valuation. There's virtually a zero correlation between your starting P/E and your one year forward performance. Where valuations matter a lot more is over the long term. And the way in our work, our long term returns are actually somewhat below average over the next 5 or 10 years because of that high evaluation. But in the short term, it really tends to be more about where are we in the economic cycle, and then it's investor sentiment as well. The other thing I think is really important is people have this view like, okay, the S&P historically has traded at a P/E multiple of 16. That's in their head.

Oscarlyn: Right

Keith: That is true. But I will tell you today's S&P is not yesterday's S&P a simple stat. In 1990 the technology sector of the S&P was about 5%. Allocation wise. That's now over 30%. And really if you include some of these other growth stocks, it's almost 45% in these kind of growth tech stocks. They trade at a higher valuation. And they have huge cash flow and huge profit margins. So we can all argue what the right P/E is not a magic number, but all those factors should come into play when you think about valuations.

Visual Description: Oscarlyn reacting to Keith.

Oscarlyn: Well, and Keith, a follow up question, because we're talking about technology, and one of the follow up questions we get often is, is technology in a bubble? Is AI in a bubble? What do we think about that.

Visual Description: Keith answering Oscarlyn.

Keith: So our answer is no. There's certainly speculative parts of the market. But in general, when we go back to our historical framework, back in 2000, we had we had much more significant outperformance of tech relative to today. And the difference with today is we're seeing the earnings. Tech has a strongest earnings momentum. Every bull market has a key theme. As I mentioned earlier, the key theme is AI. So we think structurally tech is still in a good place. That's why we still are overweighting it. If we look at this chart in front of us right now, 

Visual Description: A white screen appears with title: Large caps have the strongest earnings trends, followed by mid caps. A line graph shows the forward earnings per share of S&P 500, S&P Mid Cap 400, and S&P Small Cap 600 from December 2021 to December 2024. All three begin to rise in June 2022 with S&P Mid Cap 400 at the highest, then all begin dropping around November 2022. By December 2024, the S&P 500 reaches around 124, S&P Mid Cap 400 reaches around 110, and S&P Small Cap 600 reaches around 97. The graphic highlights the steady decrease of S&P Small Cap 600 from September 2023 to December 2024.

Text on Screen: Truist Advisory Services, Inc. | Data sources: Truist IAG, FactSet. | Past performance does not guarantee future results.

Keith: it looks like the forward earnings trends for large caps versus mid-caps versus small caps. And what's really stands out is large cap earnings have been much stronger than everywhere else. And why is that is because what's happened indices have much greater exposure to technology and that's where their earnings is as well. So again our story is we still like tech. We don't think we're in a bubble. And we think this AI bull market still has further to go.

Oscarlyn: And within our guidance, we continue to be very significantly allocated to large caps. Recently we've I think become more favorable on mid caps. Can you explain why and what's going on there?

Keith: Sure. So again, I would say the order is large caps then mid caps, which we upgraded late last year, and then small caps. Part of it is this chart that large caps have the, the the greatest earnings. Now they're also trading at a more premium valuation. As we just discussed. mid caps are trading at a relatively cheap price at least your starting point is is good. mid cap should also benefit from some of these pro-growth policies as far as deregulation and a likely pickup in M&A. And also I think what you're going to see a bit of this year is a tug of war where people get excited about one part of the market or like the economy, and they will rotate into tech. And then all of a sudden, if the economy is a little bit stronger, they'll rotate back into mid cap. So instead of trying to capture each move and be very like get the exact point right, having those complement each other I think is really beneficial. And then small caps, they trade in line with mid caps in general, but they also are more affected by these higher interest rates because they have a lot more of what we call floating rate debt.

Oscarlyn: Right, right. So important information for 

Visual Description: Oscarlyn reacting to Keith.

Oscarlyn: folks to know. Let's turn to a second or for a second turn to. We've been team USA for a long time.

Keith: Yeah.

Oscarlyn: And that's worked out really well for for our clients. Overall. 

Visual Description: Four panelist sitting at the desk. 

Oscarlyn: International developed markets continue really to underperform by a fairly wide margin. 

Visual Description: Oscarlyn talking to Keith.

Oscarlyn: And I talked about that in the open. What would it take for us to become more constructive on those international markets?

Visual Description: Keith answering Oscarlyn.

Keith: Yeah. So you're right. We've been team USA for a long time. I will say the best thing going for international markets is very depressed expectations. You know it seems like everyone is team USA now. So a lot of folks have kind of come to our point of view. So I think the bar for positive surprises is low. If you have something where, let's say the tariff risk is less than what was thought, if a dollar starts to move down, that would be a positive. The other thing is tech. Tech has a lot lower competition. So let's say our view which is more positive still on tech becomes less positive. That would also be beneficial as well. And then lastly, if we see some progress on Ukraine and Russia or more stimulus from from follow through from china, those are all things we're looking at and we're looking at closely because again, expectations are relatively low. But the the takeaway though is we still think the fundamental trends are still better in the US. And that's why we're maintaining that allocation or heavy allocation to to the US.

Oscarlyn: Back to the US 

Visual Description: Oscarlyn reacting to Keith.

Oscarlyn: exceptionalism that Mike talked about. Well, Keith, we're going to quickly wrap up on stocks here. Any last thoughts that you want to make sure our viewers hear from you?

Visual Description: Keith answering Oscarlyn.

Keith: Sure I will just say we covered a lot of ground. We do go back to the bull in a china shop. The main message is the primary market trend is still up. We want to be aligned with that, that uptrend. 

Visual Description: A dark purple box slides it from the left.

On Screen Text: A bull in a china shop | Stay aligned and anchored with the primary uptrend trend | Balance optimism with potential disruptions

Keith: We certainly expect some disruption. So we have to balance the optimism we have on the economy that Mike spoke about the uptrend with potential disruptions along the way. Again, to us, that will likely provide an opportunity. 

Visual Description: Four panelist sitting at the desk. 

Keith: And also we pride ourselves on following this weight of the evidence approach as the year progresses, as we get some of more clarity on things, 

Visual Description: Keith answering Oscarlyn.

Keith: expect that we will adjust as the year goes along. But this is where we see things today.

Visual Description: Oscarlyn talking to panelists.

Oscarlyn: Yeah, well thank you. And I want to call out one of the things I've heard from everybody is really opportunity.

Visual Description: Four panelist sitting at the desk. 

Oscarlyn: Right. And so in times of market disruption like initially the focus is about the volatility and the disruption. But within that you know our belief is that there's opportunity to and it's a great time to reach out to your advisor and have that conversation around your portfolio and how it's positioned. Well, Keith. Mike, Chip, thank you all so much for being here. Thank you for your guidance and your insight. We always appreciate it. And I know our clients benefit from it. So thank you so much. 

Visual Description: Oscarlyn looking to the camera, addressing the viewers.

Oscarlyn: And as you said, Keith, we covered a lot of ground today. If you want to view the charts that we've shared and explore other market and economic content, Truist Wealth’s monthly publication, The Market Navigator, which this team puts together every month, is available through your advisor, so reach out to your advisor for that. 

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Oscarlyn: Also want to share some information about additional content that I hope you may find impactful to your financial journey. The second full season of Truist Wealth’s Podcast, I've been meaning to do that, including two unique series, one on sustaining wealth and the other on family businesses, is available through Apple Podcast, Spotify and truist.com/dothat. Our 2025 bonus episode recapping some of our 2024 highlights actually drops today, and in it we talk about market volatility. So, you know, if you want that reminder you can go to this episode. I just really encourage you to listen. The podcast is really an extension of the care that all of us, of all of us at Truist Wealth 

Visual Description: Oscarlyn looking to the camera, addressing the viewers.

Oscarlyn: have for our clients. Our team wants to remind you that regardless of short term market movements, we believe really and leaning into the benefits of a diversified portfolio. And you heard Keith talk about that today and Chip, specifically. Built on the long term view of markets with an understanding of your unique financial planning situation and goals, a Truist advisor can support you on your investment journey. They'll listen to you. They'll understand your goals, and they can help you put complex market environments like the one we're in, as well as potential opportunities and a long term context, helping you to make prudent adjustments to your portfolio along the way. Thank you for trusting the Truist team to be part of your financial journey. And lastly, I have my same request as every quarter. We want this livecast to be a great experience for you. So if all goes well in a few seconds, a survey is going to appear in your WebEx screen. Please take the time to complete it and to give us your feedback. We go through every data point that you give us. We look at every comment, and we use your opinions and your perspective to shape how we approach our future events. So thank you again for filling out that survey, and we look forward to talking with you again in April. Take care.

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Fixed Income is represented by the Bloomberg U.S. Aggregate Index. The index measures the performance of the U.S. investment grade bond market. The index invests in a wide spectrum of public, investment-grade, taxable, fixed income securities in the United States – including government, corporate, and international dollar-denominated bonds, as well as mortgage-backed and asset-backed securities, all with maturities of more than 1 year.

Commodities are represented by the Bloomberg Commodity Index which is a composition of futures contracts on physical commodities. It currently includes a diversified mix of commodities in five sectors including energy, agriculture, industrial metals, precious metals and livestock. The weightings of the commodities are calculated in accordance with rules that ensure that the relative proportion of each of the underlying individual commodities reflects its global economic significance and market liquidity.

Cash is represented by the ICE BofA U.S. Treasury Bill 3 Month Index which is a subset of the ICE BofA 0-1 Year U.S. Treasury Index including all securities with a remaining term to final maturity less than 3 months.

U.S. Large Cap Equity is represented by the S&P 500 Index which is an unmanaged index comprised of 500 widely-held securities considered to be representative of the stock market in general.

U.S. Mid Cap is represented by the S&P MidCap 400® provides investors with a benchmark for mid-sized companies. The index, which is distinct from the large-cap S&P 500®, measures the performance of mid-sized companies, reflecting the distinctive risk and return characteristics of this market segment.

U.S. Small Cap Core Equity is represented by the S&P 600 Small Cap Index which is a measure of the performance of the small-cap segment of the U.S. equity universe

International Developed Markets is represented by the MSCI EAFE Index is an equity index which captures large and mid cap representation across 21 Developed Markets countries* around the world, excluding the U.S. and Canada. With 799 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country. Emerging Markets is represented by the MSCI Emerging Markets Index captures large and mid cap representation across 24 Emerging Markets (EM) countries*. With 1,386 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.

Value is represented by the S&P 500 Value Index which is a subset of stocks in the S&P 500 that have the properties of value stocks. Growth is represented by the S&P 500 Growth Index which is a subset of stocks in the S&P 500 that have the properties of growth stocks.

U.S. Government Bonds are represented by the Bloomberg U.S. Government Index which is an unmanaged index comprised of all publicly issued, non-convertible domestic debt of the U.S. government or any agency thereof, or any quasi-federal corporation and of corporate debt guaranteed by the U.S. government

U.S. Mortgage-Backed Securities are represented by the Bloomberg U.S. Mortgage-Backed Securities (MBS) Index which covers agency mortgage-backed pass-through securities (both fixed-rate and hybrid ARM) issued by Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC).

U.S. Investment Grade Corporate Bonds are represented by the Bloomberg U.S. Corporate Investment Grade Index which is an unmanaged index consisting of publicly issued U.S. Corporate and specified foreign debentures and secured notes that are rated investment grade (Baa3/BBB- or higher) by at least two ratings agencies, have at least one year to final maturity and have at least $250 million par amount outstanding.

U.S. High Yield Corp is represented by the ICE BofA U.S. High Yield Index tracks the performance of below investment grade, but not in default, U.S. dollar denominated corporate bonds publicly issued in the U.S. domestic market, and includes issues with a credit rating of BBB or below, as rated by Moody’s and S&P.

Floating Rate Bank Loans are represented by the Morningstar LSTA Leveraged Loan 100 Index. The index represents tradable, senior-secured, U.S.-dollar-denominated non-investment-grade loans.

Global Equity is represented by the MSCI All World Country (ACWI) Index which is defined as a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets. The MSCI ACWI Index consists of 48 country indices comprising 24 developed markets countries and 24 emerging markets countries.

Emerging Markets Equity is represented by the MSCI EM Index which is defined as a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets countries

Intermediate Term Municipal Bonds are represented by the Bloomberg Municipal Bond Blend 1-15 Year (1-17 Yr) is an unmanaged index of municipal bonds with a minimum credit rating of at least Baa, issued as part of a deal of at least $50 million, that have a maturity value of at least $5 million and a maturity range of 12 to 17 years.

U.S. Core Taxable Bonds are represented by the Bloomberg U.S. Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency).

EU Corporate is represented by the Bloomberg Euro-Aggregate Corporates Index which is a benchmark that measures the corporate component of the Euro Aggregate Index and includes investment grade, euro-denominated, fixed-rate securities.

EM hard currency bonds are represented by the Bloomberg EM USD Aggregate – Sovereign Index, which is a subset of the Bloomberg Emerging Markets Hard Currency Aggregate Index, a flagship hard currency Emerging Markets debt benchmark that includes USD-denominated debt from sovereign, quasi-sovereign, and corporate EM issuers.

International developed markets bonds unhedged are represented by the ICE BofA Global Government ex U.S. Index which tracks the performance of publicly issued investment grade sovereign debt denominated in the issuer's own domestic currency excluding all securities denominated in U.S. dollars. In order to qualify for inclusion in the Index, a country (i) must be a member of the FX-G10 or Western Europe; 

(ii) must have an investment grade rating.

U.S. preferred securities are represented by the ICE BofA Preferred Stock Fixed Rate Index which tracks the performance of fixed rate US dollar-denominated preferred securities issued in the US domestic market.

U.S. TIPS are represented by the ICE BofA U.S. Treasury Inflation Linked Index which is an unmanaged index comprised of US Treasury Inflation Protected Securities with at least $1 billion in outstanding face value and a remaining term to final maturity of greater than one year.

High yield municipal bonds are represented by the Bloomberg HY Municipal Bond Index which is an unmanaged index made up of bonds that are non-investment grade, unrated, or rated below with a remaining maturity of at least one year.

S&P 500 Information Technology Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the information technology sector based on GICS® classification.

S&P 500 Financials Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the financials sector based on GICS® classification.

S&P 500 Energy Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the energy sector based on GICS® classification.

S&P 500 Materials Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the materials sector based on GICS® classification.

S&P 500 Industrials Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the industrials sector based on GICS® classification.

S&P 500 Consumer Discretionary Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the consumer discretionary sector based on GICS® classification.

S&P 500 Communication Services Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the communication services sector based on GICS® classification.

S&P 500 Utilities Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the utilities sector based on GICS® classification.

S&P 500 Consumer Staples Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the consumer staples sector based on GICS® classification.

S&P 500 Health Care Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the health care sector based on GICS® classification.

S&P 500 Real Estate Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the real estate sector based on GICS® classification.

The HFRI Fund Weighted Composite Index which is a global, equal-weighted index of single-manager funds that report to HFR Database. Constituent funds report monthly net of all fees performance in US Dollar and have a minimum of $50 Million under management or a twelve (12) month track record of active performance.

The HFRI Macro (Total) Index includes managers with a broad range of strategies in which the investment process in predicated on movements in underlying economic variables and the impact these have on equity, fixed income, hard currency, and commodities markets.

Investing in commodities is speculative and involves a high degree of risk and not suitable for all investors.

Hedge funds often engage in leveraging and speculative investment practices that may increase the risk of investment loss, can be highly illiquid, and are not required to provide periodic pricing or valuation information to investors.

Hedge funds may involve complex tax structures and delays in distributing tax information. Hedge funds are not subject to the same regulatory requirements as mutual funds and often charge higher fees. Investing in commodities is speculative and involves a high degree of risk and not suitable for all investors. You could lose all or a substantial portion of your investment.

The Morningstar LSTA Leveraged Loan Index is a service mark of Morningstar, Inc. and has been licensed for certain purposes by Truist Bank. Morningstar and the Loan Syndications and Trading Association (LSTA) do not guarantee the accuracy and/or completeness of the Truist or any data included therein and shall have no liability for the use of such data.

Alternative strategies are not suitable for all investors. Many alternative strategies use sophisticated and aggressive techniques. Certain alternative strategies may be tied to hard assets such as commodities, currencies and real estate and may be subject to greater volatility as they may be affected by overall market movements, changes in interest rates of factors affecting a particular or currency, and international economic, political, and regulatory developments.

Investing in commodities is speculative and involves a high degree of risk and not suitable for all investors.

©2024 Truist Financial Corporation. Truist®, the Truist logo, and Truist purple are service marks of Truist Financial Corporation. All rights reserved.

CN:2024-xxx EXP 12-2025

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