Around the Horn: Monthly Fixed Income Roundtable with UBS Asset Management
The desk posits that current conditions in the fixed income market suggest a cautious approach from investors as we head into Q4. Per the full note from UBS Asset Management, the team emphasizes a need to focus on economic themes that may influence bond yields and liquidity strategies moving forward. The commentary highlights ongoing concerns about central bank policies as crucial drivers of both fixed income market dynamics and investment decisions. Given the lack of significant scheduled events in the near term, this interpretation finds resonance in the broader market outlook, sensitive to near-term impulses and inflationary trends.
What the desk is arguing
The commentary stresses that as we transition into the final quarter of the year, investors need to remain vigilant regarding economic indicators that might affect fixed income securities. UBS Asset Management's fixed income experts advise focusing on how central bank policies are shifting, particularly against a backdrop of inflation and interest rate volatility.
With rates remaining elevated, UBS analysts suggest that clients re-evaluate their portfolio allocations. They pointed out that balancing risk and yield will become increasingly important as we approach the end of the fiscal year and possible seasonal liquidity pressures emerge.
Where it sits in our coverage
Currently, our desk has a consensus target of 1.075 for the relevant currency pair, with some firms projecting tighter ranges: - jpmorgan: target 1.10, tenor Mar26 - bofa: target 1.04, tenor Mar26
This view reflects a balanced approach relative to the forecasts around the market, with jpmorgan slightly above the consensus target and bofa sitting at the lower end of the range. Thus, the desk's positioning aligns closely with anticipated trends, nodding toward a cautious optimism in upcoming months.
How other firms see it
Recently aligned firms are adopting a similar cautious tone, reflecting concerns about inflation and central bank policy adjustments. Conversely, bofa holds a more bearish outlook suggesting that yields may trend lower than current levels based on their economic assessments.
Participants should monitor movements in pairs like USD/JPY for potential implications stemming from the shifting landscape of monetary policy, as well as changes in the Treasury yields which remain pivotal to fixed income dynamics.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01UBS Asset Management highlights cautious market sentiment as we approach Q4.
- 02Investors are urged to evaluate bond risk and yield dynamics amid central bank policy shifts.
- 03Consensus target for the currency pair sits at 1.075, with varied perspectives across firms.
- 04Monitoring economic indicators and liquidity conditions will be key in the near term.
Market implications
Traders should be attentive to shifts in Treasury yields and inflation measurements as they could provide hints about upcoming volatility in the fixed income market. The consensus target of 1.075 could be tested should economic data suggest stronger-than-expected inflation.
Risks to this view
Any significant changes in central bank guidance that suggest a shift toward more aggressive rate hikes could reverse current positioning and align markets more closely with **bofa**'s bearish outlook on the fixed income landscape.
We are back now to continue with their ongoing series around the horn with UBS Asset Management's fixed income team, the monthly fixed income roundtable. As you know, on a monthly basis, we do hear from top portfolio managers and business heads from the Asset Management Muni taxable fixed income and liquidity teams. We will hear candidly from them today with respect to their views on markets and what they believe you, our financial advisor, should be focused on within the fixed income space.
So joining us for the conversation today, glad to welcome back Anthony Liotti, head of the fixed income SMA advisory group. Anthony will also serve as our moderator for today's segment. Anthony is joined today by Dave Walczak, senior portfolio manager for Asset Management's liquidity strategies.
Dave Rothweiler, senior portfolio manager for Asset Management's short duration and liquidity strategies. We also have with us Dave Ignolo, head of Asset Management's U.S. corporate fixed income strategies, as well as David Michael, portfolio manager for emerging markets. Patrick Matiewicz, portfolio manager for the U.S. multi-sector SMA.
And Ryan Nugent, senior municipal bond portfolio manager and co-head of the municipal management team at UBS Asset Management. So with that, Anthony and team, thank you for dropping by, spending some time today with our financial advisors. Anthony, let me go ahead now and pass it over to you.
Great. Dan, thank you so much. Good to hear you back on the line here.
Welcome to the October fixed income around the horn. Hard to believe there's only two more of these left in the year. The year's gone by exceptionally quick.
It's pretty unbelievable. So we'll start with some broad economic themes as we head into the fourth quarter. Then I'll then turn it over to our portfolio managers, like they typically do, to share their insights on the markets and how we're positioning across our client portfolios.
So we've got three quarters down the books. Markets continue to behave, I'd say, like a well-oiled machine. It's one of those Goldilocks type of moments.
The wind remains strong. Sales are full. Technical and credit fundamentals are, I'd say, very broadly supportive.
Spreads remain especially tight, more so on the taxable front. Inflows across, I'd say, all fixed income asset classes thus far through three quarters continues to be really strong. New issue supply, which has been hitting new highs across certain asset classes, continues to be, I'd say, fairly well digested.
And I think perhaps the most important thing, performance throughout fixed income this year has really been really positive. The one question that lingers is, once you mention Goldilocks moment, is how long will this last? That's one of the questions that we're continuing to ask ourselves.
Turning to the Fed and some key data, in September, as expected, the Fed resumed its easing cycle at their September meeting with a 25 basis point cut. Nothing really new here. It was a move that was widely anticipated.
There had been some outside speculation of a surprise 50 basis point cut, similar to what they did last year in 2024. However, I'd say the Fed opted for a bit of a more measured approach. There was one dissenting vote, which was maybe, as you would like to assume, by the newly appointed governor, Stephen Moran, which favored a 50 basis point cut being a bit more aggressive.
One of the items that Powell mentioned and or pointed to were, really, you can see even this dual mandate, and we've talked about this before, it's the signs of a weakness in the labor market as really the justification for initiating the easing process once again. The FOMC voted 11 to 1. We now have a target range of 4 to 4.25.
The Fed did clearly mention that this is a very tricky balancing act while maintaining progress on inflation. But really, I think everyone will probably iterate this on the call when talking to the Fed. They're really concerned about the employment picture.
But what we do have to say is inflation really does remain sticky. Maybe it's manageable. Headline CPI did rise in August, and core inflation does remain, I'd say, somewhat steady around that 3.1% number.
But it really appears that the Fed is going to look to these near-term price increases, viewing it perhaps, I hope they're right, as more temporary inflation, and that their expectations that it will drift lower in the coming quarters. I do say, though, the headwinds are real, right? The impact from the tariffs imposed by the Trump administration has really yet to have been fully distributed by consumers, or to consumers, I should say.
And that timing could be lagging, right? Policymakers remain very much divided, I'd say. Hawks note that projections for 2026 inflation is taking up modestly while employment expectations edged a bit lower.
The Doves, meanwhile, argue that long-term inflation expectations will probably remain a bit more well-anchored. But the hiring momentum warrants really more extreme policy support. So the ramifications, if you will, from the cut, from a rates perspective, the curve really kind of remained or has been confined to relatively tight trading range since the September cut.
Initially, you had yields rise slightly across the curve, 2s, 5s, 10s, and 30s. But they've since really retraced, and the curve is really unchanged through the second week of October. The current government shutdown has really had, I'd say, minimal impact on trading activity.
But I think the concerns here is looking out, what are the downstream effects that could show up in both the quality and the timeliness of the economic data that we get once this does, the government does reopen, particularly with the employment sectors, right? And so given the Fed tightened sensitivity to the labor outlook, when you have reduced clarity on that, it could complicate their decisions moving forward. So clearly, a lot more to chew on on the table here.
Let me pause there. And like we always do, let me shift it over to our PMs. We're going to start with, like we always do, on the front end of the curve.
David Wolzak, take it away, my friend. Yeah. Thanks, Anthony.
So I think you did a really good job kind of recapping the main takeaways from the FOMC meeting last month. Just one other thing to highlight, they also did release another updated version of the dot plot, which for the rest of this year, the median expectation is calling for two additional cuts before the end of the year. However, it would only take one member to adjust kind of their vote upward in order for that median to basically show only one cut.
So the point being is, yes, the median kind of settled on two, but it was a fairly close call. Just looking at where Fed Funds Futures is currently pricing, it is currently showing about 24 basis points for the cuts for the October meeting, and then cumulatively around 44 basis points for the cuts before the end of the year. So roughly in line with kind of where the Fed's, again, median dot plot is in terms of what we're seeing being reflected in Fed Funds Futures.
You know, Anthony, you mentioned the government shutdown. You know, some folks may have heard me talk about this, but I'm always keen to highlight the distinction between what we're going through now, the U.S. government shutdown, and what we experienced earlier this year with the debt ceiling situation. So is the, you know, the current shutdown is by no means the same situation in terms of the market concern about Treasury's ability to repay an upcoming Treasury maturity.
You know, that's something we see more in the cases of, you know, a debt ceiling negotiation. In a shutdown scenario, you know, the Treasury staff that's in charge of issuing and also redeeming Treasury securities, they're deemed essential. So, you know, we've seen Treasury auctions continue to occur ever since the government shutdown back last week.
Really, you know, no impact in terms of yields thus far. So up until this point, it's really been business as usual in terms of the Treasury market functioning standpoint. So I think that's just an important, you know, distinction to make kind of as we are now entering, you know, a longer period of a government shutdown here.
You know, in terms of what the market's looking at going forward, you know, of course, with the shutdown, the data releases, as you mentioned, Anthony, are going to be a little bit sparse. We will get the Fed minutes coming up here in just under a half hour. So the market will be watching that closely.
On the labor market side, we did see ADP released last week, which printed negative $32,000, which was a surprise to the downside versus $51,000 expected. So, again, I think adding to that narrative in terms of some of the weakness that we're seeing come across in the labor market. Away from that, you know, just looking at where, you know, certain asset flows are here in the front end, just looking at money market fund assets here in the U.S. as measured by the ICI, they hit another all-time high.
Three last ones, they have $7.365 trillion. So, you know, seemingly continue to see, you know, good inflows across the industry into money market funds there. With that, I'll pause and turn it over to Dave Rockweiler.
Hey, thanks so much, Dave. Just starting with credit, we can summarize our views by the following. Starting with fundamentals, you know, they're largely okay.
Economic growth supports risk assets. And looking at the latest GDP figures, fundamentals are decent for the investment-grade universe. Technicals are also decent, particularly in the front end.
Flows have been positive. We've had a strong new issuance calendar, which has been met with healthy demand. So, as Anthony mentioned, we believe the only negative is really corporate valuations.
Bloomberg, USAID, Corporate OAS is at 73 basis points, just one basis point off its low this past September, which is the lowest it's been since the late 90s. So, we're at multi-decade lows here. Looking at the credit curves, if we look at the spread pickup between even three- and five-year non-financials, they're down to the 12th or 13th percentile over the past 10 years.
So, taken together, the overall corporate market has definitely richened up, especially in the long end, and has become much flatter. I'll contrast that with the zero-to-three, one-to-three-year front-end credit curve, which has largely lagged the move, and it's still about 15 basis points off its lows. So, while we're still in this quote-unquote Goldilocks moment, as Anthony described it, the front end does offer a more defensive posture with less exposure to the impact of any spread widening.
Overall, we're still overweight financials and utilities. Moving on to duration, in the short-duration one-to-three-year space, we're still hovering around neutral. It's slightly long.
In the ultra-short strategy, we're still targeting about a 0.6-year duration or so. On the curve, as Dave Walczak mentioned, we still expect the Fed to move this year, which will make the front-end curve go from being inverted to eventually flatten out as the Fed reduces rates. So, with that, I'll pass it on to David Gnolo.
Thank you. Yeah, thanks, David. You know, in our view, investment-grade credit continues to be supported by various positive drivers.
And David Rothwell talked about it briefly. Technicals demand for overall investment-grade credit throughout the year has been very consistent. Its inflows have come into the at-class not only domestic but globally as people reach and look for yield opportunities in credit and to match up their duration with their assets and liabilities.
So, the technical side of the demand remains quite robust. And then supply, we're a little bit, from a supply perspective, we're running slightly above last year's averages, but we're very well within the range that was expected. So, the stronger demand with the supply that we've seen has been well-absorbed in the marketplace and has kept the credit spreads, as David mentioned earlier, at pretty, from a historical perspective, tight levels.
You know, then when you look at fundamentals in corporate America, every quarter we continue to see from earnings releases and debt levels, corporate America has been doing quite well. They've been hanging in and have been well-prepared for any kind of potential slowdown we see in economic growth. We've seen a lot of talk about hirings being slowed, but we haven't seen unemployment drift up in any material way.
So, fundamentals from that perspective and for just general corporate America in most sectors has been pretty solid and consistent. So, we'll wait third quarter earnings announcements that are going to come out in the next couple of weeks and see what they will say from that point. But really, from that perspective, we have seen very little concerns from an overall perspective, in our view, from a fundamental perspective.
And then finally, growth. It's positive. It's staying positive again.
And then the third quarter growth is a positive quarter, and we'll see how fourth quarter goes with all expectations from, in our view, is that what we believe is that growth will be positive again in the fourth quarter, which is very supportive for the asset class. And then you have, as David Walzak mentioned, the Fed has already cut once and is leaning more toward kind of concerns more about the labor market versus inflation. That is supportive for credit.
I mean, credit, a little inflation in investment grade corporate market is not a bad thing. So, if we have little inflation, it stays where it is roughly two and a half to three percent and growth is positive. And then the Fed cuts, you know, 44 percent.
You know, if we get two more cuts, that's all from a growth perspective. And I think from a historical perspective is good for investment grade credit. So, I think, you know, you've got strong technicals, steady fundamentals, positive growth.
The Fed is cutting. So, you've got the wind behind our sails. And I think, you know, the one caveat that, you know, David Walzak talked about relative value is definitely more from a historical perspective on the titering of its ranges.
But I will say yields are still still pretty attractive. I mean, when you have a yields between in the mid fours and upper fours for investment grade credit, those are pretty, pretty attractive entry points for a long term historical perspective. So, we still see strong demand.
Yields are still attractive. Supply is very manageable. And in credit overall, I think as we move through this quarter, we believe that it's a pretty solid kind of space right now as we close out the year.
And what we're thinking about just for the how we're looking at sectors and the curve, we really continue. Our biggest overweight continues to be, in our view, the financial sector. We think it offers relative value from less supply because of kind of the regulatory environment is more favorable for the financial sector, as well as because of that, they're not going to issue as much supply in the bank space.
So, that in conjunction with positive economic growth continues to be our favorite sector to be overweight in investment grade credit. And I think from a underweight perspective, we're still concerned about pharma and health care sectors because of M&A and regulatory risk. So, we've been cautious on those sectors.
But in general, like I said, corporate fundamentals have been pretty solid. So, it's really just relative value between the sectors and taking advantage of opportunities. I will say we expect going forward M&A risk to increase.
We're starting to see little signs of that. And I think, you know, as corporate America gets a little more comfortable with the tariff and environment we now live in, and with valuations pretty strong, we expect M&A to pick up, which I think is going to give us great opportunities to take advantage of situations when those M&A opportunities present themselves. So, that'll be, I think, a good thing for us going forward to see that volatility when we start to see that pick up.
And I think, you know, finally, we really, kind of the belly of the curve, you know, that five to 10-year part of the curve, we really continue to think that's our favorite part of the credit curve. And we believe that, one, because you get that additional yield pickup because the treasury curve is starting to steepen. And then we expect the Fed to continue to cut great.
So, with that, we think that to lock in that yield for a little longer and kind of that belly of the curve is an attractive place to be. So, with that, I will pass it on to David Michael to talk about the emerging market sector. Thank you, David.
Emerging markets continue to be one of the best-performing fixed-income asset classes, benefiting from multiple forces, high all-in yields, attractive valuations, as well as strong and improving fundamentals. Emerging markets continue to reflect strong performance through September, spreads were over 19 basis points tighter, and this provided another month of an excess of a 1% return, adding this to the 2% return we saw in August, which brings year-to-date EM sovereign fixed-income returns to almost 11%. EM technicals are also strong.
Emerging markets have seen consistent inflows since mid-April, and that strong flow momentum continues. Over the last few weeks, there have been a number of upgrades as well across the emerging markets. Costa Rica's sovereign credit rating was upgraded from BA3 to BA2.
Sri Lanka emerged from selective default. Jamaica was upgraded by S&P from BB- to BB. Morocco's rating was upgraded to BB- from BB+, and Bahamas was upgraded to BB- from BB+.
These upgrades are just a few of the indicators that reflect the strong fundamentals that we see in EM, and this underpins our positive outlook for emerging markets' fixed income throughout the rest of this year and into 2026. From there, let me hand it off to Patrick for an update from our multi-sector team. Yeah, thanks, David, and starting with rates from the multi-sector desk, no change to the general view we have on treasury rates off the curve, which have remained pretty consistent for the bulk of the year.
We still believe rates remain range-bound here, hemmed in by stubborn inflation that keeps rates from falling too low on the one hand, but this fragile and now arguably mysterious labor market that merits some additional policy normalization, some of which is already priced by the market. On the 10-year think, between 390 and 430 or so from a range standpoint, generally about where we've been, give or take, since Liberation Day. Now, we've been apt to trade from the longer side on duration within those ranges, and we still want to be disciplined adders at the tops, but similarly, we'd be looking to shed incremental duration when we approach the bottoms of ranges, and we would argue that a durable breach lower is unlikely unless or until inflation lags meaningfully lower or labor deteriorates in some excessive fashion.
As of yet, you're not seeing that. In other words, at the moment, at least, it strikes us as a time for discipline. Curve-wise, the flattening impulse that we had in September, that's stabilized somewhat here in October. 5.30s for context had fallen from roughly 120 to now 99 and stayed there, which in our view poses a nice reentry as the Fed's likely to continue moving here at a time where inflation prints might suggest more prudence and somewhat slower action, as well as this robust growth backdrop that we have.
I'd also quickly highlight interest rate volatilities moved meaningfully lower as measured by the move index, for example, and that's likely a result of the dissipating uncertainty around policy in general. That should continue to bolster the case for this range-bound treasury market I mentioned and otherwise support risk assets that my colleagues highlighted. And to that end, I won't belabor the point on credit and why the backdrop is supportive and seems probable to remain so.
My colleagues did a great job of that. But one additional note just on sector very quickly remains the attractiveness within the preferred space, where here in October, you're seeing some relative outperformance from the fix-to-refix thousand-par subsegment versus more senior debt. And I'd contend a bit overdue, considerate of the backdrop overall.
It's a great way to dovetail or draft VIX's views on financials that he just mentioned, which should benefit from a steeper yield curve, technical strength owing to less than need to issue from regulatory relief, and in general, conservative stewardship and plenty of oversight in this last decade plus, preferreds being a great way to take advantage of that down the capital structure with incremental yield and spread. So alongside EM, preferreds remain really the choice allocation for the marginal dollar for us, just given the strength and fundamentals, technicals, as well as valuations. With that, I will turn it to Ryan Nugent for more clarity on the tax exempt municipal side.
Thank you, Patrick. With the Muni summer reinvestment behind us, we look for a more normalized supply and demand relationship as we enter the fourth quarter. September primary supply presented a manageable $49 billion coming to market, ranking it as the fourth lowest supply number of 2025.
This was paired with steady reinvestment for the month and accommodating Federal Reserve that set the stage for a strong Muni rally. The Bloomberg Muni Index started the month off strong and was able to hold on to these gains for the month. September posed the largest gains of the year with a monthly return of 232 basis points and pushed the year-to-date returns to 264 basis points.
This performance was led by an area of the curve that had been mostly absent of return for the majority of the year. Going into September, the 10-year and end maturities were the only positive performers on a total return basis. The best performer was the five-year, with a return of 4.01%.
The long bond and the 20-year were the drag on the Bloomberg Muni Index, performance to a tune of negative 3.59% and negative 2.87%, respectively. That all changed in September as we saw leadership from those maturities longer than 10 years contributing the most to returns. The long bond and the 20-year were up the most, contributing 405 basis points and 388 basis points on the month and bringing both of their year-to-date returns into positive territory.
The curve movement has flattened the Muni curve as short maturities underperformed longer maturities and tightened the 2s to 30s AAA Muni spread from 241 basis points at the end of August to 194 basis points at the end of September. Throughout the month, we continued to stress being more evenly distributed across the curve in our active strategies, focusing on the five- to seven-year maturities paired with the 10- to 17-year longer maturities. We continue to do this on a duration-neutral basis as we believe the curve shape offers value versus duration risk.
Even with this longer end rally, duration management is key. We continue to stress that the Bloomberg Muni Index started off the year with a duration of a 621, and even with this rally, currently sits at a 685. That is a duration extension of two-thirds of a year.
If left unattended, the account you had at the beginning of the year is most likely taking on more duration risk than it was at the beginning of 2025. We continue to focus on the primary market as it offers the cheapest, most diverse pool of bonds for our needs. Primary deals are priced to move, and paired with our secondary trading activity and electronic trading systems, have been able to source a great deal of opportunities for the strategies.
We've stressed a bent on upping our credit quality when possible. We've added names in the primary, such as a high-quality Minnesota GEO name. In five to 10 years, that spreads close to plus 10.
Texas Water, in the 10 to 15-year area, that spreads of plus 20. City of Austin, in the five to 15-year area, spreads of plus 20 to 30. And we've been selectively adding single-A MT revenue bonds down in the two to seven-year area, with spreads north of plus 50.
Looking ahead, the story for the remainder of the year will continue to be the supply-demand dynamic. Supply is up 13% year over year, totaling over $430 billion. And October is off to a strong start.
Luckily, while reinvestment doesn't stand out over the next few months, we've seen strong fund flows to both open-end funds, as well as new ETFs. And additionally, both banks and insurance companies can still find attractive taxable equivalent rates versus taxable rates, thus building on the depth in market participants. However, we'll be closely monitoring supply and how it affects demand as we work through the end of the year, any additional kind of Fed decisions that may present, and year-end tax-harvesting dynamics.
So having said that, back to you, Anthony. Great. Ryan, thank you very much.
I'm going to just pivot to both Stephen and Neil. I believe they both have some questions. I'll hit Neil up, freshly back from his trip over the pond.
Neil? Thank you. I appreciate it.
Ryan, you talked to this incredible turnaround that we saw and witnessed in performance last month, and how it was bifurcated across the curve, long-end versus the short-end. I don't think any of us here would necessarily anticipate a continuation of that going forward. And I certainly wouldn't put you on the spot and ask you where you see returns through year-end.
But maybe discuss some of the factors that you see dictating performance and returns through year-end. Sure, of course. I think there are some of the same factors that we've kind of seen throughout the year.
Supply and demand continues to be in the front row there, really focusing on things. We don't have really any real big reinvestment months that we can kind of look back to. I think we have to look at this elevated supply.
Could pressure current yields? However, I think a lot of it has to do with the Fed as well. We had, obviously, strong performance in September due to a little more clarity from the Fed.
But I also think supply was muted due to active Fed meetings. And I think that if we do have kind of two more active Fed meetings throughout the end of the year, you're going to see those weeks be muted in terms of the supply that comes to market, which obviously assists in our performance. That being said, throw in maybe tax-loss harvesting.
And we have another variable that's going to affect supply and demand. I would say, all that being said, I wouldn't expect another monster month like we've seen. But the market feels definitely more balanced and more functioning in terms of the participants that are out there.
So a couple of things on the radar. But currently, right now, it definitely feels fairly balanced, which is a positive thing. Great stuff.
I appreciate it, Ryan. Thanks. Yeah, that September bump was really warranted and much needed.
So thanks for that, Neil. Appreciate it. Steve, let's turn it over to you, my friend.
Sure. Vigs, just a question on consolidation. You had mentioned M&A opportunity.
We saw the recent news with Fifth Third buying Comerica. I'm wondering if you could just share some thoughts on the banking sector from a consolidation opportunity standpoint. Maybe, I don't know, the energy sector or other sectors that you feel may be right for that type of consolidation, given the backdrop with potentially lower rates in the future and an economy that continues to move right along.
Thanks. You know, I think there's three sectors that we're looking at and work with our analyst group on these sectors. You mentioned the energy sector.
We think there's definitely going to be, there's a lot of talk that oil prices will drift lower as we move into 2026, based on concerns about supply and capacity. So with that, and where overall valuations are, there's a lot of talk with our analyst team that we believe that there's a real likelihood that we're going to see M&A consolidation within the energy sector with some of the lower quality BBB credits or even some of the crossover or strong high yield credits being purchased by some of the stronger entities. So we're looking for opportunities to be proactive in that space to try to pick some of those names before that event occurs.
So we're looking at that space. You know, the consumer cyclical sector is also the sector that we think we're going to see some M&A activity in 2026 as well. So, you know, those two sectors are probably two sectors that we're looking at pretty hard.
And, you know, the regional bank situation, you know, I think some of the, I think Jamie Diamond actually made a comment from JP Morgan that they expected some consolidation on the regional side, you know, going forward in the banking sector. So, you know, we are looking at some of those names. It's a little tougher there because a lot of those regional banks, there might be a few that we could actually try to take advantage of a potential acquisition.
But some of those banks are pretty small. They don't really have much debt. So we can't really scale that risk into the portfolios.
But definitely in the cyclical and energy sector, we see some opportunities there. And we're looking at that going forward. Awesome.
Thanks so much, Biggs. Great. Biggs, thanks a lot.
Thanks, everyone to the team. Appreciate it. That wraps up, excuse me, our October call.
We'll look forward to talking to you in November. Have a great month. Thank you. at UBS Trending.
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