FICC Focus Credit Crunch: France, Tariffs, Fed, UK: Credit Always Resilient
Sep 10, 2025
Iain Stealey, International CIO of Global Fixed Income at JPMorgan Asset Management, shares his insights on the strength of credit markets amidst global challenges. He discusses how credit outperformed equities during crises in France and the UK, emphasizing its resilience against economic fluctuations. The conversation delves into the impact of US Fed policies, inflation concerns, and Europe's fiscal pressures. Stealey also highlights investment strategies in fixed income sectors, providing a hopeful outlook for corporate credit amidst turbulence.
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France Spread Likely Contained
- France's OAT-Bund spread widened but likely won't reach extreme levels seen in past sovereign crises.
- Iain Stealey argues France remains a large Eurozone economy and long-term buying opportunity at wider spreads.
Downgrades Would Be Gradual
- Rating agencies move slowly and downgrade risk to France is more likely to be one notch initially.
- Iain Stealey expects selling won't be large because sovereigns remain widely held despite rating moves.
French Corporates More Resilient Than Sovereign
- Corporate credit in France has held up far better than sovereign debt and equities.
- Stealey and Mahesh note corporations are healthier than many governments, making credit relatively attractive.