Bond investing in a late economic-cycle

IT IS understandable that bond investors are worried as the economic cycle matures, especially in the United States, and as the Fed continues to hike interest rates gradually.

Conceptually, as we head towards the late stage of an economic cycle, corporate profitability (and their ability to repay bond holders) typically peaks. Meanwhile, rising policy rates in the US may often act as a headwind for bonds, especially longer tenor bonds, which are more sensitive to rising interest rates.