There Are Concerns The Global Credit Cycle Is Easing Says Portfolio Balancing credit risk with interest rate risk in a dynamically managed portfolio can be an all weather approach. central banks across the us, uk and europe have shifted to an easing phase, signaling a change in the credit cycle. the chances of a soft landing for the global economy look promising, in our view. Sameer samana, wells fargo senior global market strategist, and kevin caron, washington crossing advisors senior portfolio manager.» subscribe to cnbc: http:.
Global Central Bank Easing Cycle Grinds Along In October Reuters With the onset of the global rate easing cycle, global credit conditions look set to improve toward the end of the year. however, this outcome is not guaranteed, given the risks posed by disparities in growth prospects among major economies, heightened geopolitical strife, and still elevated borrowing costs. We think the unwind of the cspp portfolio is now likely priced in to a very large extent. in hy, the outperformance of the usd market has been more noticeable, particularly since the summer (exhibit 4). at current levels, the oas differential between the eur and usd hy markets stands at its 81. The us federal reserve turbo charged the global easing cycle that had begun with rate cuts from other major global central banks. we discuss what this cycle may mean. Credit consensus default risk data shows a clear global credit factor. however, the timing and scale of individual sector responses to changes in the macro environment shows significant variation over time. in each credit cycle phase, some sectors will lead or lag, but the majority will move as a group. no two cycles are.
Global Credit Cycle Lurches Down The Big Picture The us federal reserve turbo charged the global easing cycle that had begun with rate cuts from other major global central banks. we discuss what this cycle may mean. Credit consensus default risk data shows a clear global credit factor. however, the timing and scale of individual sector responses to changes in the macro environment shows significant variation over time. in each credit cycle phase, some sectors will lead or lag, but the majority will move as a group. no two cycles are. Higher for longer rates and increasingly selective lenders could dilute the credit headroom of lower rated and highly leveraged borrowers, leading to more defaults. our ccis tend to lead credit stress and recovery by six to 10 quarters, suggesting that a potential upturn could occur in 2025 if the ccis are indeed in a trough in the latest reading. When purchasing an investment grade bond, a credit investor expects to be compensated for multiple levels of risk: interest rate risk, liquidity risk, market credit risk and security specific risk. in an investment grade bond portfolio, these risks are measured by several metrics that attempt to convey the overall risk. The respondents, who are members of the international association of credit portfolio managers, say ongoing challenges posed by rising inflation, higher interest rates and geopolitical concerns are now joined by a threat to credit availability caused by reduced bank liquidity and credit risk concerns. Following an extraordinarily friendly market for fixed income in 2024, our fixed income teams assess the outlook for 2025. although sovereign and corporate credit spreads are at multi year tights, we remain constructive on emerging market debt going into 2025.