Last week, the U.S. Federal Reserve resumed its rate-cutting cycle, delivering a widely anticipated 25 basis point reduction in response to signs of a slowing labor market. While most FOMC members expect further cuts, there is significant uncertainty about the timing and extent, which could fuel market volatility as investors parse economic data. The Fed’s move was seen as proactive “risk management,” aiming to ensure against recession risks without signaling imminent economic distress. U.S. equity markets responded positively, with all major indices closing at record highs and small caps outperforming large caps for the week. Retail sales surprised to the upside, indicating resilient consumer demand despite labor market softness and persistent inflation. Yields on U.S. government bonds rose modestly, especially for longer durations, even as mortgage rates declined.