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Fearing the Next Recession? Investing at the Front End of the Bond Market

By Advisor Perspectives
Wealth Management, Financial Services

Now in its 10th year, the U.S. economic expansion could become the longest on record: Our forecast calls for the current “late-cycle” phase of the expansion to last at least another year, barring any policy mistakes. However, we do think growth is likely to slow somewhat in the year ahead as the effects of tax reform fade, tighter financial conditions start to affect the real economy, and risks like trade conflicts weigh on investors’ outlook.

After such a prolonged period of economic growth and easy monetary conditions – which have helped buoy prices for equities and other risk assets – investors may be wondering if it’s time to take some chips off the table. The turn in an economic cycle is difficult to predict, but with the prospect of volatility increasing as rates continue to rise and financial conditions tighten, it may be prudent to consider reducing risk and focusing on more stable sources of potential income with lower exposure to changes in interest rates.

Read more at Advisor Perspectives.

Photo: Allan Ajifo

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