The market contraction presents better opportunities than we’ve seen in years to generate income, which we balance against the need for resilience in the face of a potential recession.
Rising yields, wider spreads, and heightened market volatility are providing an attractive environment, but caution in credit selection is warranted.
Russia’s invasion of Ukraine and the world’s subsequent sanctions and actions to curtail Russia’s access to the global financial system have thrown financial markets into turmoil.
As uncertainty pervades the markets, we are positioning defensively, increasing liquidity and remaining nimble in an effort to generate income amid bouts of heightened volatility.
With global growth rebounding amid uncertainties over inflation and COVID-19 variants, investors may want to consider a somewhat more cautious and flexible approach when seeking a consistent yield.
We are cautiously optimistic about economic growth over the next year, but over the longer term, disruptive factors will likely contribute to heightened volatility and lower returns across both fixed income and equity markets.
Events of the last several weeks have not changed our long-term outlook, but we have become a bit more cautious in the short term.