The synchronised global expansion and buoyant markets have been able to withstand a number of crucial questions. How will extreme levels of monetary policy accommodation eventually be unwound? Are the reflationary, pro-growth elements of President Trump's agenda alive or dead?
When will a long forecasted increase in government bond yields materialise? What is the impact of a wildcard such as North Korea?
As unsettling as it may be, we do not expect complete clarity on these questions in the near term, and we do think there may be some unexpected answers - including that the global economic cycle may nevertheless continue to power through.
In respect to central bank action, we do believe reducing balance sheet holdings (quantitative tightening) should add to volatility in fixed income markets, just as adding to central bank balance sheets (quantitative easing) had previously reduced volatility.
We believe the European high yield sector continues to benefit from the strong recovery in Europe and lesser sensitivity to changes in US monetary policy, while at the same time being technically well supported by the European Central Bank's investment grade corporate bond purchases - depressing yields and spreads beyond the target universe.
Projected default rates remain subdued, which in relation to improving fundamentals maintains the attractiveness of the risk premium offered by European high yield credit spreads.
Despite this, we are partially hedging our exposure to European credit through credit default swaps, reducing the effective credit sector exposure as valuations are at recent tights and volatility may emerge from the monetary policy surprises and political risk on the horizon.
We also continue to hold a position in US TIPS, as we believe the US economy will reflate beyond recent trend growth but fall short of pre-crisis levels. Inflation expectations have further to recover should fiscal agendas be followed through and the US yield curve continues to reflect a milder pace of hiking cycle than indicated by the US Federal Reserve.
Inflation will likely move toward the Fed's 2% target rate and maybe even run a little bit hotter than this. We believe the bias for higher real rates remains over the coming 12 months due to three factors: higher economic growth expectations, higher inflation expectations and an increase in risk premia.
Jon Jonsson is manager of the Neuberger Berman Global Bond Absolute Return fund
• European high yield continues to benefit from the strong recovery
• US economy will reflate beyond recent trend growth
• Do not expect clarity on key investor questions in near term
• Quantitative tightening to increase bond market volatility