How to benefit from volatility in fixed income

Higher inflation, rising interest rates and greater uncertainty have made investing more challenging. For bond investors, simply owning bonds may no longer be enough to successfully diversify risk.

Today’s fixed income world rewards investment managers who are willing to accommodate changes in the market backdrop and outlook in real time.

Higher interest rates have become a frequently cited risk to corporate earnings and the economy. The conventional thinking is straightforward: when borrowing costs rise, companies face higher interest expenses, profits come under pressure, and economic growth slows. While there is truth to that relationship, the current cycle may differ from investors’ expectations.

U.S. midterm elections are rapidly approaching, with the latest polls pointing to a divided government, with Democrats gaining control of at least one house of Congress.