Although high quality bonds like Treasuries and investment grade are critical sources of downside protection late-cycle and during a recession, a new cycle brings new opportunities in credit. This slide shows credit returns through the economic cycle, measured by the starting point and direction of ISM manufacturing PMIs. As the economy emerges from a recession (“turnaround”), the outlook for credit downgrades and defaults improves and investors find opportunities further out on the risk spectrum in areas like high yield and leveraged loans. Usually the recession pushes the weakest companies into the default and downgrades weaker areas of the investment grade market, and lending standards tighten, so the high yield and leveraged loans sectors have typically actually moved up overall in quality, and should benefit from improving economic conditions and credit markets. These areas continue to do well throughout the expansion, and direct lending begins to benefit during the height of the expansion and into late-cycle.