Markets will likely face more volatility as the global economy exits a period of massive fiscal and monetary support. In this post-policy era, attractive yields on high- quality bonds encourage a more resilient approach to investing.

The effects of tighter financial conditions are becoming apparent, bringing forward the risk of recession while suggesting a supportive backdrop for bonds.

Resilient assets with attractive yields can help portfolios stay centered in 2023, when we expect inflation to moderate, central bank policy to steady, and a recession to take hold.

With yields now higher, we believe bonds offer compelling value in this challenging macro environment.

Volatility, inflation, and geopolitical strain have countries and businesses focusing on defense. We argue for building resilience in portfolios in this fragmenting world, and delve into risks and opportunities we foresee over the next five years.

Active management and risk awareness may help investors navigate a global economy where inflation becomes “too hot” and growth “too cold.”

A long-term approach can help investors position for opportunities in a volatile and rapidly advancing business cycle.

Investors should prepare to navigate unfamiliar terrain as the macroeconomic landscape undergoes dramatic transformations over the secular horizon.

We expect growth and inflation to peak in 2021 in developed economies, and we are focused on liquidity and flexibility in our portfolios.