The Credit Edge by Bloomberg Intelligence

UBS’s Mish Picks Credit Winners, Losers in US Election

Sep 19, 2024

Matt Mish, head of credit strategy at UBS, joins Bloomberg's James Crombie and senior analyst Julie Hung to dissect the impact of the US election on credit markets. Mish predicts that a Kamala Harris victory would favor bonds in basic industries and utilities due to support for existing stimulus policies. On the flip side, he warns that a Democratic win could hinder tech and telecom debt. They also discuss the outlook for US consumers, the stress in private credit markets, and the potential positives for energy and defense under a Trump presidency.

43:52

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Episode guests

Julie Hung

James Crombie

Matt Mish

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Episode notes

Podcast summary created with Snipd AI

Quick takeaways

A victory for Kamala Harris may bolster the performance of utility and capital goods bonds due to stimulus policy support.

Concerns about consumer health reveal a split market, with high-income consumers driving spending while lower-income consumers show signs of stress.

Deep dives

Impact of Rate Cuts on Credit Markets

Expectations of rate cuts have fueled optimism in credit markets, leading to increased investment flows as clients seek better yields. The anticipated cuts, projected at three this year, are expected to incentivize investors to extend their duration, moving from short-term credit into longer-term securities. With the Fed shifting policy towards a more neutral stance, the expectation is that the credit market will continue to attract capital as borrowing costs decline. As clients reassess their portfolios in light of these changes, the overall outlook for credit remains positive, with yields still in a favorable range for investors.

Intro

2min

Navigating the Credit Market Landscape

13min

Private Credit and Real Estate Outlook

8min

Election Impact on Market Dynamics

16min

Global Portfolio Managers Navigate US Credit Market Dynamics

4min

Insights on Credit Strategy and Market Dynamics

2min

Victory for Kamala Harris in the US election would boost the bonds of basic industries, capital goods companies and utilities, according to Matt Mish, head of credit strategy at UBS. “A lot of that we think is tied to the preservation of the inflation reduction act and support of many of the Biden-era stimulus policies,” Mish tells Bloomberg News’ James Crombie and Bloomberg Intelligence senior credit analyst Julie Hung in the latest Credit Edge podcast. Conversely, a win for Democrats would be a drag on debt in the telecoms, tech, banks and auto sectors. Victory for Donald Trump would be positive for energy, autos and aerospace defense, Mish adds. Also in this episode, Mish and Hung debate the outlook for US consumers and stress in private credit markets.

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