Janus Henderson: Thoughts and bonds - a balancing act

Summary points:

Cautious central banks should help sustain range-bound to modestly higher yields, even as they reverse accommodative monetary policy. However, a more aggressive than expected reversal could trigger an upward spike in volatility

Range-bound rates and low volatility should continue to drive demand for corporate credit. Still, valuations are expensive and drivers of significant spread tightening appear limited

We expect a lower return environment for corporate credit in 2018 and carry to drive returns. Given rich valuations and the asymmetric risk profile of credit investing, default avoidance will be critical

For the Q1 2018 issue please click here.