New York Life Investment Management global markets strategist Julia Herman said
U.S. economic resilience implies the neutral policy rate may be higher than
previously expected. She warned further rises in Treasury yields could begin to
threaten the resilience that has allowed markets so far to absorb tighter
financial conditions, and that whether markets remain favorable depends on
whether higher rates reflect strong economic fundamentals. On allocations, NYLIM
prefers short-dated, low-duration credit as an attractive yield source, saying
incremental compensation for extending duration is limited while long-term
yields remain volatile.
