Cyclical - Companies that sell discretionary consumer items, such as cars, or industries highly sensitive to changes in the economy, such as miners. The prices of equities and bonds issued by cyclical companies tend to be strongly affected by ups and downs in the overall economy, when compared to non-cyclical companies.
Fiscal stimulus – where the government attempts to stimulate the economy, usually by increasing public spending or decreasing taxation.
Monetary stimulus – where a central bank attempts to stimulate the economy, usually by lowering interest rates or through extrodinary measures such as quantitative easing.
Defensive – these companies usually have revenues with low or no correlation to the wider macro-economy
Sovereign bonds – debt issued by governments
High yield – lower rated debt, the higher of which is investment grade.
Credit markets - A marketplace for investment in corporate bonds and associated derivatives.
Credit risk - The risk that a borrower will default on its contractual obligations to investors, by failing to make the required debt payments.
Credit spreads - The difference in the yield of corporate bonds over equivalent government bonds.
Interest rate risk – The sensitivity of a bond to rises or falls in central bank interest rates.
Short – An investment position where the investor will profit from a fall in the value of the security.
Deflation – Reduction in the general level of prices in an economy
Reflation – The rise in prices, usually towards long-term trends
Default rates -- The percentage of companies in a particular market that fail to pay interest or to return an original amount loaned when due.
Credit cycle – The cyclical nature of the demand in corporate debt, usually linked to the economic cycle
Unsecured lending – Where the debtor borrows without having to secure assets against the debt
Gearing/leverage – in the context of investment trusts these are borrowings, usually from a bank, that are used to make extra investments in the market with the aim of making a return greater than the cost of borrowing.