The second quarter started with a bang. Just two days into the quarter, we witnessed “Liberation Day” and its sweeping tariff announcements. This marked the start of a tremendously volatile quarter for publicly-traded asset classes. These policy shifts triggered a sharp, albeit brief, sell-off across equities and credit markets. Within just four trading sessions, the S&P 500 declined by over 12% and credit spreads widened markedly as risk aversion spiked. The carnage was quickly recouped as announced tariffs were “postponed” and dip-buying emerged in risk assets. During the quarter, the Treasury curve twisted steeper as long-dated yields rose as concerns over fiscal deficits and a rising term premium took hold, while front-end rates remained anchored by Federal Reserve policy. The 10-year Treasury yield was largely unchanged in aggregate, but the spread between 10-year and 2-year yields widened to 0.56 percentage points by quarter-end, reflecting investor demand for greater compensation on longer maturities. Importantly, there has been a notable dispersion between “soft” economic data and the “hard” data. Soft data, which are qualitative tools such as measures of consumer expectations, largely weakened in the second quarter. However, we have not seen that translate meaningfully to the hard data - the actual figures on the labor market, inflation, and growth.