Balancing Risks As The Credit Cycle Turns

Summary

• Central banks across the US, UK and Europe have shifted to an easing phase, signaling a change in the credit cycle.
• A credit barbell combines interest-rate-sensitive bonds with higher-yielding credit assets because their returns are usually negatively correlated.
• The challenges facing the world’s three biggest economic drivers - the US, Europe and China - have become increasingly diverse.

Klaus Vedfelt

By Scott DiMaggio, CFA and John Taylor

Balancing credit risk with interest-rate risk in a dynamically managed portfolio can be an all-weather approach.

Central banks across the US, UK and Europe have shifted to an easing phase, signaling a