Credit marches on, but will it last?
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One of the recurring themes we have been talking about over the past couple of years has been the robustness of credit markets in general, particularly the riskier part of the spectrum such as High Yield and Emerging Market credits, and the remarkable performCredit marches on, but will it last?
One of the recurring themes we have been talking about over the past couple of years has been the robustness of credit markets in general, particularly the riskier part of the spectrum such as High Yield and Emerging Market credits, and the remarkable performance registered since mid-2016. Credit markets posted yet again another remarkable performance in 2017 and the initial trading sessions of 2018, as there seems to be no signs of the global search for yield abating for the time being. Interest returns across both regions were the greatest contributors to total returns in 2017 whereas so far, price returns are taking centre stage. Economic data has been resilient, both in the Eurozone and in the US, and this was translated into yet another positive string of corporate results in the second half of 2017. PMIs remain robust, unemployment low, and inflation has increased too albeit, has stalled somewhat of late. The European Central Bank forecast for inflation for 2018, 2019 and 2020 remained intact. Investors were welcomed by positive trading screens in the initial trading sessions of the year as risk-on mode remains ever so present. All risky assets have rallied so far this year. Read more