Investment Grade
Our Global Fixed Income and European strategists find that improving corporate fundamentals continue to support tight credit spreads. However, a growing divide between stronger and weaker borrowers is emerging. Our Corporate Health Monitors show that balance…
Corporate health remains supportive of tight credit spreads in both the US and Europe, but a growing divide is emerging beneath the surface. Investment-grade issuers continue to strengthen, while lower-rated borrowers face mounting pressures. Credit markets are pricing resilience, leaving investors vulnerable should corporate fundamentals begin to deteriorate.
The 10-year Treasury term premium is now competitive with Baa- and Ba-rated credit spreads. Even without term premium compression, duration carry trades could outperform credit carry trades in a low rate vol environment.
