The European Credit Strategist: Tech-tock

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The European Credit Strategist: Tech-tock

, given the meaningful drop in the The peace trade

oil price. Yet, last month’s Fed meeting reflected a committee persistently combating

high inflation. Our US economists now expect the Fed to hike three times this year. For No bubble trouble in bonds

credit, what effect is more powerful when central banks diverge? The Fed tightening

CreditBook: Sun still shiningfinancial conditions, or the ECB loosening them? Looking back at the 2014-2019 period

of central bank divergence, we note Euro credit beta outperformed, as did peripheral Let’s get real

corporate bonds. The surprise is perhaps with duration: front-end corporate bonds did

much better than long-end corporate bonds during this period. HY Strategy: HYer for longer

Tech makes the world go round

Tech-tock

The other big question for the second half is will AI-disruption begin to have a more CreditBook: American Fever

meaningful effect on European company fundamentals, either in the form of a step-up in

Hikes…can take a hikecorporate profitability/cashflow, or stronger earnings margins. To date, Europe looks like

it has been slower in its AI adoption compared to the US. But given the drop in online Credit Investor Survey: All things

job postings across Europe since the launch of ChatGPT, it feels only a matter of time private

before AI starts to have a more meaningful impact on European credit fundamentals.

This should herald a 2H where credit spread dispersion stays high across the bond If you like it bubbly…

market, we think. Peace out, risk on

CreditBook: Is it all over?

Deal or no deal?

Trading ideas and investment strategies discussed herein may give rise to significant risk and are Who let the hawks out?

not suitable for all investors.