Neuberger Berman's Jonsson: Why we are hedging our EU credit exposure

Strong recovery in Europe

The synchronised global expansion and buoyant markets have been able to withstand a number of crucial questions. How will extreme levels of monetary policy accommodation eventually be unwound? Are the reflationary, pro-growth elements of President Trump's agenda alive or dead?

When will a long forecasted increase in government bond yields materialise? What is the impact of a wildcard such as North Korea? As unsettling as it may be, we do not expect complete clarity on these questions in the near term, and we do think there may be some unexpected answers - including that the global economic cycle may nevertheless continue to power through. In respect to central bank action, we do believe reducing balance sheet holdings (quantitative tightening) should add to volatility in fixed income markets, just as adding to central bank balance sheets (quantitative easin...