There remain many challenges ahead for credit markets
On the surface, fixed income markets has been pretty quiet but, below the surface, the currents have been violent.
Although many of us were focussed on the possibility of this, it has caught market participants off guard, particularly those for whom rates have been a permanent source of income: consistent, solid, one way and always positive.
Investment grade corporate credit spreads have barely moved over the quarter either in Europe or in the US. Yet, the asset class has had one of its most negative, and most volatile, quarters ever. The US Investment Grade Corporate Credit index lost 4.5% in the first quarter of 2021, making it the worst quarterly performance since the global financial crisis. High yield markets fared no better with a loss of 0.08% for global high yield. In this publication, we focus almost exclusively on what’s happening in credit land.
Which way inflation?: issues in focus this quarter
In this issue of 360°, we also take a closer look at:
- Relative value: the unresponsiveness of spreads
- Structured credit: Structures have done what they were designed to do
- Sustainable finance: the link between ESG scores and credit ratings
See below for a flavour of these sections or read the full report for a more comprehensive picture.
Archive: previous editions of 360°
As fixed income markets have moved through the economic cycle, our thinking has also developed – take a look at some of our previous reports to see how the investment landscape has changed over the past year.
- The changing climate in fixed income: 360°, Q1 2020
- The road less travelled: 360°, Q4 2020
- Credit investing in the coronavirus era: 360°, Q3 2020
- Recalibrating the rulebook: 360°, Q2 2020
- Seeking riches with the tide far out: 360°, Q1 2020