Key Takeaways

■ After a lengthy period of artificially low volatility driven by unconventional central bank policies, we believe global markets have entered a phase that may exhibit higher baseline volatility than over the past decade.

■ Volatility spikes may also be more pronounced compared to prior cycles, due to the potentially destabilizing influence of short volatility strategies and the reduction of traditional liquidity providers.

■ The corporate debt market is exhibiting excesses along several dimensions, and there is growing evidence of late-cycle dynamics.

■ Specialized approaches may help fixed incomeinvestors navigate this climate.