FICC Focus
High Yield 2Q Investor Survey, Views Amid Tariffs: Credit Crunch
Apr 9, 2025
In this engaging discussion, Per Wehrmann, Head of European high yield at DWS Investments GmBH, shares his expertise on the shifting landscapes of investor sentiment and market dynamics. He and Mahesh Bhimalingam analyze the recent downturn in high yield markets, driven by rising default concerns and trade tensions. The conversation highlights the cautious stance of investors, their increasing cash holdings, and the impact of central bank policies. They also explore which sectors are favored and the implications for future performance.
37:22
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Quick takeaways
- Investor sentiment has significantly declined for Q2, dropping from net 35% in Q1 to net 14% amid market uncertainties.
- Tariffs are now seen as the primary driver influencing high-yield returns, overshadowing traditional factors like inflation and economic policies.
Deep dives
Investor Sentiment and Returns Outlook
The podcast highlights a quarterly investor survey that reflects pessimism regarding returns in the high-yield market for the upcoming quarter. The survey results showed a drop in positive sentiment from net 35% for Q1 to a mere net 14% for Q2, suggesting that investors expect lower returns amid current market uncertainties. Furthermore, since the completion of the survey, the high-yield market has already experienced a decline of 2.2%, indicating growing concerns among investors. The discussion emphasizes that while there was initial optimism, recent volatility has significantly altered expectations, leading to a more cautious outlook.
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