The 2022 bear market lifted yields to levels not seen for more than a decade, positioning fixed income markets—particularly the higher-yielding sectors—for solid, long-term returns. The Fed’s return to easing mode should add momentum to this unusual bull market. Bottom line: fixed income is positioned for solid returns, and if serious downside risks materialize, it should also provide a counterweight to risk assets in portfolios.

The post-COVID market has been one of powerful cross currents—ranging from geopolitics and trade tensions to monetary and fiscal policies—resulting in notable performance dispersion across the global public and private credit spectrum. The dispersion is a stark reminder that just buying bonds and assets won’t do; success hinges upon positioning in the right parts of the yield curve, in the right sectors, and in the right currencies.

As participants struggle to chart a course amidst the cascade of headlines, markets have been prone to dramatic overreactions and directional corrections. The lesson for investors is clear: don’t confuse extreme market movements with changes in fundamentals. Rely on in-depth research and credit underwriting to distinguish market spasms from true changes in underlying value and capitalize on reversions back to fundamentals.