And I think investment-grade credit is probably one of those areas that benefit, given its lower susceptibility to growth than emerging markets and high yield have. VB: Now, I do think that's going to be reversing, given the higher yields that you're seeing. We haven't seen flows reverse, though they have stabilized. TW: It does feel, though, that investor positioning is still quite defensive. VB: It should also be noted that, interest rates moving higher, it'll take years before that really filters through to companies, as they've used low rates to really push out maturities as well as drive interest costs lower. They've been very disciplined from a financial policy standpoint. Their balance sheets remain very strong, even as sales and earnings have recovered. Over the past two years, companies have shored up their liquidity. TB: Now, corporate fundamentals have reached an inflection point, but from a position of strength. But I really don't think we're going to go through this downgrade cycle in the investment-grade market like you've seen in other downturns. VB: The question I always get from investors is, "What's priced in?" And true, growth is slowing down, inflation remains persistently high and there is a risk of a recession. We ended the year at the 13th percentile. We think about over the past 10 years, looking at the yields: Last August, we were in the third percentile. TW: The moves in US IG have been similarly sharp. But today, the yield is almost 200 basis points higher, as well as with nothing yielding negative.
In the European investment-grade market, for example, six months ago, almost half the market was negative yielding. Fast forward to today, one can effectively make the reverse argument, with investment-grade corporate yields providing yields with cushion against downside. When yields were low, occasionally equity investors would look to high-dividend-paying equities as yields with growth upside. In fact, the yield on the global corporate index hasn't been this high since the global financial crisis or the height of the eurozone crisis. Vivek Bommi: Tiffanie, it's been a really interesting year in fixed-income markets and especially in the investment-grade credit market.