Greg Venizelos - Credit markets on a steady footing into Q4

Greg Venizelos - Credit markets on a steady footing into Q4

Market commentary
10 October 2017

Greg Venizelos, Senior Credit Strategist at AXA Investment Managers (AXA IM), reviews the credit market:

  • The reflation trade strikes back as September saw interest rates rise, the dollar move higher, high yield (HY) credit gains and investment grade (IG) returns in the red. This pattern could persist into year-end.
  • Renewed hopes around fiscal stimulus in the US and relative value considerations are near term tailwinds for USD credit which reversed its recent underperformance vs EUR credit in September.
  • Duration aversion, the hunt for yield, healthy growth/earnings, and a potential US tax reform plan, are all supportive for HY markets. USD HY market could hit double digit returns if spread tightening persists.
  • A higher share of credit purchases post European Central Bank quantitative easing tapering in 2018 could help address European government bond (EGB) scarcity issues, while simultaneously underpinning EUR credit technicals, killing two birds with one stone.

To read the full report please see here.

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