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It has been an uncomfortable period for bond investors. Headlines continue to focus on persistent inflation, rising debt levels and the risk that interest rates remain higher for longer than previously expected. As government bond yields have moved sharply higher, many investors have questioned whether duration remains an attractive investment.

The Investment Clock is one of several factors feeding into our asset allocation process. It provides a way to tell the time using economic indicators that tell us about the strength of growth and the direction of inflation to see where which part of the economic cycle we are heading in. By tracking the indicators month after month we can understand how the business cycle is developing.

The rate cycle may be approaching a turning point, yet the balance is fragile. For equity investors, the direction of bond yields, and the policy response they provoke, will be critical in determining whether current pressures ease or develop into a broader market disruption.

Credit is a cornerstone asset class for many investors. Credit investing is sometimes portrayed as a homogenous activity, but we disagree: the nature of credit markets makes a homogenous approach less appropriate, not more.

Investors consider fixed income and liquidity for a variety of reasons. Many of which will change as markets rise and fall, but certain characteristics are always attractive – notably resilience, income and liquidity.

Despite a strong rebound in global equity markets over the summer, the outlook remains finely balanced as investors contend with rising bond yields, persistent inflation pressures and ongoing geopolitical risks. Disruptions to global energy supplies from the Middle East conflict have kept oil prices elevated, reinforcing the position of the Investment Clock being in Stagflation.