Credit has performed really well, and flows are showing rerisking into fixed income, particularly credit; specifically, European investment grade credit is favored due to its performance and stability.
European fixed income is liked, especially in the current environment where monetary policy steps are important, and it offers investable ways to participate in the market with a focus on stability.
Volatility in short-term rates, especially in Europe and the UK, weakens the hedging properties of these rates, so investors should pay attention to cash as a way to sidestep duration risk and for capital preservation and liquidity.
Due to the ECB repricing expectations, floating rate instruments are a good place to invest because they have very good protections embedded into the asset class.
Inflation expectations have not fed through to the market, particularly on the longer-term horizon, so inflation-linked bonds (linkers) could be a good diversifier and hedge against inflation.