Global growth may be strengthening, but, when it comes to global private investing, the outlook may not be so rosy if central banks start tightening, reports PIMCO in a cyclical outlook report.

Read: Global growth hinges on fiscal stimulus: OECD

For instance, the report forecasts world GDP growth of 2.75% to 3.25%, and CPI inflation of 2.25% to 2.75% (analyzing selected countries). With those strong economic indicators, “exhausted central banks are likely to move closer to the exit from ultra-accommodative monetary polices,” says the report. The result: highly leveraged private and public borrowers around the world might not be able “to keep dancing when the music stops.”

In addition to the Fed’s recent and expected future rate hikes, PIMCO expects the ECB to change its guidance on policy rates about midyear, and to further scale back asset purchases starting in early 2018.

As a result, PIMCO expects to be underweight European corporate credit at current valuations. Rigorous credit research is paramount, the report warns. The firm expects to focus on “bend but don’t break” credits, which are defensive, high-quality, short-dated and default-remote credit exposures.

The firm is neutral on equity risk in its asset allocation portfolios, though global expansion could boost cheaper cyclical markets.

In an economics report, Desjardins notes that, when it comes to global inflation, the measure simply reflects the rise in oil prices.

While an inflation rise seems more durable in the U.S., with its strong growth and low unemployment, not all conditions are in place for kicking off monetary firming in other countries. For instance, the U.K. and Canada have gaps between their real and potential GDP rates. Further, due to Brexit, uncertainty remains especially high in the U.K.

Read: To raise or not to raise rates? What the BoC must consider

Desjardins’ point: inflation isn’t a solid trend, with major advanced nations not at the same point in their economic cycles and in the resorption of their excess production capacity. The result will be the Fed alone continuing with monetary firming in 2017, with the U.S. dollar remaining strong against other currencies.

Read the full Desjardins report here.

Read the full PIMCO report here.

Also read: The BoC’s unofficial lower-loonie policy