Why are Aegon and Barclays warning investors to prepare for market pain despite recent credit market gains?

Aegon Asset Management and Barclays warn of potential market pain because the April credit rally—driven by optimism that the Middle East war is over and strong US earnings—is fragile; crude oil prices hit a four-year high, Treasury yields surged on inflation fears, and the Strait of Hormuz remains effectively shut due to US-Israel strikes on Iran and Tehran’s threats, sustaining geopolitical and inflation risks that have not fully receded.

What specific defensive strategies are portfolio managers like Pelteshki and Villarroel adopting amid rising uncertainty?

Portfolio managers are adopting defensive strategies including buying credit default swaps (CDS), purchasing shorter-term debt to collect yield while limiting duration risk, and maintaining or boosting hedges using indices like the iTraxx Crossover and CDX North American Investment Grade—Pelteshki is focusing on shorter-dated bonds, while Villarroel continues to partly hold his March CDS hedge on the iTraxx Crossover index.