Investors are planning to seek opportunities within fixed income if rates continue to rise. According to a recent survey of 120 U.S. institutional investors conducted by CoreData Research, nearly half (47%) of U.S. institutional investors plan to increase their allocation to fixed income if the Fed increases interest rates to around 5% as expected.

Under such a scenario, investment-grade corporate bonds would be the biggest recipient of higher allocations, with 29% of investors planning to add to their allocation.

Many, if not most, investors expect some form of recession in some form as the Federal Reserve continues to raise interest rates. Inflation may be slowing down, but the Fed is unlikely to ease off on rate hikes too quickly, considering the U.S. central bank was seen as doing too little, too late, when inflation started to rise.