The fixed income balancing act

Governments and central banks are like trapeze artists. If they manage to stay balanced and upright on the wire, western economies will experience ‘new, normal’ economic growth. But if governments and central banks fall leftwards, economies face an upturn in inflation and thus interest rates. Slip right and they will suffer deflation and a double-dip recession. The outlook for credit investors will be determined by the success of this balancing act. Obviously, this has created a great deal of uncertainty. We continue, however, to stick by our call at the start of the year that credit wil...