🎉 Party like it’s the 1990s🎉 Technicals have improved considerably now that we seem to have reached the end of the hiking cycle. High expectations are priced in. The market is partying like it’s the 1990s. This also means there is room for disappointment, and in such case spreads could move wider. However, we will need a more severe slowdown or recession to move markets more materially. We think the odds on this are still considerable, given the slow transmission of the tightening cycle. We argue that it remains wise to stay cautious in this environment. Download our Q1 2024 Credit Quarterly Outlook for more details: https://lnkd.in/gVQNijyY Reinout Schapers Sander Bus David Hawa Erik Keller, CAIA, FRM Maurice Meijers Evert Giesen Jan Willem de Moor Rico Jumelet, CFA, CAIA #CreditInvesting #Duration #InvestmentGrade #HighYield
We continue to like a strategy where the overall risk of the portfolio is managed closer to neutral, while taking credit risk in those parts of the market where there is still value (Banks, Euro IG). Strong issuer selection and buying quality carry offers the best value. We remain comfortable with investment grade in general, and more cautious on high yield, especially the lower-rated part.