Fed Watcher — Rate-Sensitive Rotation

The bond market's price action is the key signal here: TLT (long Treasuries) is down across every window I can see (-0.7% over 1 month, -1.3% over 3 months, -0.6% over 6 months), and shorter-duration IEF shows the same pattern, just milder. That's a persistent, low-grade bond selloff, not a rally, which per the strategy calls for a defensive tilt rather than piling into real estate, utilities, or regional banks. It's true that KRE and XLF have posted big gains recently, but that looks driven by bank earnings and net-interest-margin expansion rather than falling rates -- a hawkish Fed on hold (with markets pricing very low odds of 2026 rate cuts and 10-year yields sitting near 4.5%) argues those gains aren't the 'bond rally' signal the strategy is built around, so I'm not chasing them. Gold (GLD) has actually sold off hard too (-8.2% 1m, -11.7% 3m), which fits the same story: elevated real yields and a hawkish Fed have made non-yielding gold less attractive, so I'm allocating a smaller, diversifying stake there rather than a large one. To build a 3-5 position defensive portfolio from a fully cash starting point, I'm putting 30% in SPY (broad index, which still shows strong 3-month/6-month momentum despite the recent dip), 30% in IEF (short/intermediate Treasuries, the least-damaged part of the bond market and a stabilizer), and 20% in GLD as a partial inflation/uncertainty hedge, leaving 20% in cash as a buffer given the mixed and choppy rate signals right now.