With geopolitical tensions, fiscal uncertainty, and disruptive tariff policies dominating headlines, U.S. markets have entered another period of turbulence. For many investors, the response has been familiar: move toward the relative safety of fixed income. According to Kent White, Vice President of Fixed Income Mutual Funds at Thrivent Asset Management, fixed income is proving once again to be a vital portfolio anchor during uncertain times.

White points to the combination of elevated yields and significantly lower price volatility compared to equities as a key reason for the renewed interest. “When volatility is this high, fixed income plays an important role in providing stability,” he said. Yields across the asset class are at levels not seen in over a decade, offering income potential without taking on excessive risk.

Although the U.S. economy has thus far avoided recession, White cautions that risks have increased, largely due to the aggressive tariff policies introduced earlier this year. These have triggered episodes of market sell-offs and investor anxiety, particularly after higher-than-expected tariffs were introduced in April. While the base case remains for a soft landing, fixed income markets have responded with a clear flight to quality.

For investors preparing for potential downturns, White recommends shifting allocations into high-quality bonds and beginning to move cash out of money market funds. As interest rate cuts appear on the horizon, extending duration within bond portfolios could present an opportunity to lock in attractive yields ahead of rate declines. Treasury markets and short- to intermediate-term bond funds, he notes, offer particularly strong options for conservative repositioning.

White also highlights several key indicators that could shift his outlook further toward a recession scenario. These include a pullback in consumer spending, corporate reductions in capital expenditure, and early signs of layoffs. If these trends begin to materialize, it could mark a significant turning point for both the broader economy and investor strategy.

Despite the uncertainty, White emphasizes staying calm and maintaining a long-term perspective. The macro environment may be unstable, but fixed income offers a structured way to navigate it - with stability, yield, and clarity of purpose.

Author: Asset TV
Source: Video - Advisor’s Market360™: Recession worries - Time for fixed income