Shankar Ramakrishnan and Bruce Clark recap a volatile week in rates and credit as Middle East conflict headlines pushed oil prices higher, helping stall US investment grade issuance after a busy start to the week.
Bruce outlines a dramatic repricing of global central bank expectations, with Europe and the UK turning notably more hawkish while US futures shift from pricing multiple cuts to a small chance of a hike by year-end.
Guest Meghan Robson, Head of US Credit Strategy at BNP, says credit’s reaction has been muted as Powell stayed data-dependent, but investors are moving away from the “several cuts” narrative; she notes IG spreads have widened about 20bp since January though fundamentals remain mid-cycle.
Meghan also discusses positioning, preferred opportunities in IG and select high yield cyclicals, AI-driven software sentiment risk versus fundamentals, private credit concerns tied to leverage and transparency, key red flags (earnings declines and asset coverage), and practical hedging tools like CDX and options.