“The easy money has been made; the harder money is left.”

We noted this recently from an experienced asset manager reflecting on the current investing market. It’s fairly typical of a public trading approach emerging from a period of low prices. Eventually the worry discount goes away as fear fades. Finding the next bargain then becomes a challenge.

So where’s the value in private credit to be found? As the Great Moderation in the economy, rates, and inflation ends and we enter a new era – the Great Unwind – of higher volatility, higher rates, and reduced globalization, how will that impact less liquid assets?

As our Chart of the Week shows, the thirty-year-plus cycle of decreasing interest rates is over. The bond market may see moments of revival, as it is doing today in the face of better economic news, but hard to imagine a repeat of the heyday it enjoyed since Paul Volcker wrung double-digit inflation out of the US economy in the early 1980’s.