At the same time, weak capital spending is still a major burden to economic growth in the developed world, with the key downside risk remaining a “disorderly outcome to the euro crisis”. As a result, there runs the risk of corporate defaults and a freezing of credit markets, in which case other risk assets could see an even worse performance.

However, corporate earnings have been strong, and have been used to cut leverage, with the appetite for expansionary capital expenditure being relatively low. 

“At some point, we believe European Central Bank action on a much larger scale, either unilaterally or as part of an IMF plan, is more likely than not,” said Platt.

“The aim would be to reduce the risk of liquidity crises for potentially illiquid, but nevertheless, solvent states.  In short, we are heading in the direction of reflation via quantitative easing, with the risk of severe debt deflation in Europe the only other alternative,” he added.

Moreover, Platt says that the rollover of Italian sovereign debt early next year will be a “key crunch moment” - although markets appear on-track to remain volatile until this risk is better quantified.

Sluggish growth, ultra-low interest rates and falling inflation in 2012 complement fixed income assets, and in recent months, corporate credit has been less volatile than risk-free sovereign debt, with less of a valuation issue.

Overall, “credit looks attractive”, as Platt considers whether risk-free assets are a matter of relativities and what is already priced into different asset classes.