Junk-bond ETFs showed a slight uptick, suggesting potential outperformance in 2024, especially under a soft-landing scenario for the US economy, according to Michael Arone of State Street Global Advisors. 

While high-yield bonds may surprise investors with their resilience, concerns persist about the Fed's tightening and its impact on economic growth. Despite recent modest gains, ETFs tracking investment-grade bonds are still in the red for the year.

 Investors remain cautious about high-yield spreads and potential widening, with some preferring rate risk over credit risk. Arone suggests a diversified approach, favoring short-term debt and bonds with intermediate durations.

Finsum: Duration management could be the key to weathering the storm in 2024.