Why volatility may not be so bad after all

There is a Chinese saying 'may you live in interesting times' and, like it or not, these have certainly been interesting times for investors in the bond markets. The long downward trend in government bond yields came to an abrupt halt in the middle of last year, when investors started to anticipate faster growth in the US economy, and since then volatility has remained high by historic standards as economic data point first one way, then another. Our fixed income investment process is based around the use of economic scenarios, which help us try to anticipate 'shocks' in the market and...