The Importance of Implied Recession Odds

An interesting asset class that I looked at also recently is Highyield Ponds. For months, global high yield bonds refuse to price in any implied recession odds. They have locked in these low rates and it will take a couple of years before they go up. But there's another thing: lending standards are already pretty tight because of the banking crisis. And that means that the number of defaults or the percentage of defaults will go up to five to six percent. So maybe in not so sexy or interesting as the plausible one with I have a clear conviction that spreads are too low for what is about to happen to defaults.

Play episode from 49:45

Transcript

Episode notes

The AI-powered Podcast Player

Save insights by tapping your headphones, chat with episodes, discover the best highlights - and more!

Get the app