‘Deleveraging is a brutal process – but it is necessary’: William Cunningham profile

William Cunningham, head of global credit strategies at State Street, believes private sector deleveraging and the rise in public sector borrowing will continue, to the benefit of corporate bond investors. He explains why policy risk is the biggest threat to growth and talk of a “new normal” remains premature

Predicting the trajectory of the global economy over the next few years is one of the biggest challenges facing investors. While not discounting the possibility that the US and European economies experience a double-dip recession, the consensus of forecasters indicates they will instead go through a prolonged period of sluggish growth.

Pimco’s chief investment officer Bill Gross has dubbed this scenario the “new normal”. According to this view, the reason growth rates in developed markets are