Fixed income markets in 2022: Investing in the eye of the storm

Essential for investors to remain flexible

Storm clouds are gathering for fixed income markets in the year ahead.

The credit cycle is closer to its end than its beginning; there is a strong possibility of persistent inflation; and the removal of quantitative easing programmes could weaken demand not only for government bond markets, but for certain investment grade corporate bonds as well. Navigating this uncomfortable backdrop will be key for fixed income investors in 2022. It is likely to be another year where the starting point is not great for certain parts of the bond market. The impending monetary tightening cycle is a headwind, yields are still low for this point in the cycle, and credi...