As risks rise, the short end can offer yield and some shelter

Fixed income markets have been jolted by the Middle East conflict, rising energy prices, and a sharp backup in global yields. That has left many core bond indices under pressure, while short-duration credit has held up better thanks to higher running yields and less sensitivity to rate moves.

Longer-dated bonds may look tempting because of their higher headline yields, but the outlook for inflation and policy remains uncertain. Fiscal worries in the US, energy-linked inflation in Europe, and political noise in the UK all add to volatility.

For investors seeking income with less downside risk, the one- to three-year part of the curve stands out. It offers attractive yield without taking on as much duration risk as intermediate or long maturities.

Until there is more clarity on inflation, central bank policy, and geopolitics, shorter-duration assets appear better placed to balance return potential with resilience.