Bond outlook: Markets don't die of old age

Credit fundamentals are stable

The current business cycle could last another five years or more.

Part of our reasoning is that we believe, contrary to popular wisdom, the credit cycle drives the business cycle. There are two key components to the credit cycle, both of which are encouraging right now: the price of credit, driven by the US Federal Reserve, and the availability of credit, driven by banks. The Fed indicated that it may pause raising rates, a wise decision given slowing economic growth. Lending standards remain high, with demand for loans still strong and manageable. A deterioration in credit fundamentals would be a leading indicator for the end of the business cyc...