For investors who had expected more economic strife, sticking to those calls has become increasingly difficult. "It's going to take longer for rates to rally," said John Madziyire, senior portfolio manager and head of U.S. Treasuries and TIPS at Vanguard Fixed Income Group. "Recession or no recession, we think the probability of higher-for-longer interest rates is far greater than the likelihood of near-term cuts," credit investment firm Oaktree Capital said in a recent note. A re-acceleration in inflation could lead to higher rates than the market has priced in. Some are navigating the uncertainty by combining exposure to higher-yielding short term bonds with long-term bonds in case of a downturn.

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Persons: –, Felipe Villarroel, John Madziyire, Oaktree Capital, Danielle Poli, Anthony Woodside, Woodside, Stephen Dover, Chip Hughey, Davide Barbuscia, Richard Chang Organizations: Bond, Federal Reserve, TwentyFour Asset Management, Bank of, Fitch's U.S, Treasury, Oaktree, Fund, Reuters, U.S, Franklin Templeton Investment Solutions, Truist Advisory Services, Vanguard, Thomson Locations: U.S, Oaktree