Credit Investors Retreat Up the Curve as Duration Risk Overshadows Carry

Two independent strategy pieces this session pointed in the same direction: investors are being paid better carry in investment-grade credit than at any point in recent memory, but the duration attached to that carry remains an uncompensated risk. The iShares iBoxx Investment Grade Corporate Bond ETF was singled out as offering improved income while still embedding too much long-end sensitivity for a market where the term premium has not settled. In parallel, low-duration allocations are being added at the portfolio level, favouring floating-rate and short-maturity credit that captures spread without the mark-to-market whipsaw of the long bond. The stance is defensive rather than bearish on credit fundamentals — spreads are not the concern; the shape and volatility of the curve are. Should long-end yields stabilise, this positioning would lag; until then, the risk-adjusted case for staying short remains the consensus among income allocators.