bondmust Both U.S. investment grade and high-yield bonds over the last 20 years have posted positive excess returns when U.S. economic growth ranged between one percent and two percent,” the report said

Corporate credit markets will be safe from the economic uncertainty surrounding the fiscal cliff, according to experts at Standish Mellon, a Boston-based asset management company.

Their new report predicted the fiscal cliff would be averted and the economy would narrowly avoid tumbling into another recession. The slow economic growth coming out of the negotiations will present opportunities for bond investors. “Both U.S. investment grade and high-yield bonds over the last 20 years have posted positive excess returns when U.S. economic growth ranged between one percent and two percent,” the report said.

If Congress and the Obama administration fail to avoid the fiscal cliff, tax hikes and spending cuts amounting to 4.8 percent of U.S. gross domestic product (GDP) will go into effect at the beginning of next year. However, if a compromise deficit reduction package is reached, which Standish Mellon anticipates, it could reduce this drag sharply – enough to avoid recession.

"Under our base case scenario, the U.S. economy will suffer a fiscal drag of roughly 1.4 percent of GDP next year and U.S. real GDP growth will decelerate from 2.1 percent in 2012 to 1.4 percent in 2013," said Thomas Higgins, global macro strategist for Standish. - Read more at The Sacramento Bee

Read more at http://www.thefiscaltimes.com/Blogs/Fiscal-Cliff-Notes/2012/10/26/Slow-Growth-An-Opportunity-for-Bond-Investors.aspx#b7u6pjgv3sDL4UiI.99