Why bond managers need dry powder amid US 'regime change'

The US is in the midst of regime change. We are still waiting to see how much of his 100-day plan US President Donald Trump will - or can - put into effect, but fiscal stimulus and spending plans on the scale proposed could be transformative.

The Secretary of the Treasury is talking about 3%-4% growth, which could apply upward pressure to interest rates and inflation. Higher rates could be a positive that helps trigger investment activity and fuel growth.  Of course, the countervailing argument is that they may also lead to a strengthening of the dollar, weakening the competitiveness of US exporters.  For bond investors it will pay to be selective. We believe that it should be possible to find good US-based companies with the scale to absorb the impact of any trade wars and to identify businesses in the high yield space wi...