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Credit vs. Rates
- Credit offers higher returns while being less volatile than rates.
- This makes credit an attractive choice for fixed-income allocators.
Breakeven Analysis
- While raw spreads suggest tight credit conditions, breakeven analysis reveals a different picture.
- Credit has more room to widen before total returns are negatively impacted, especially in high yield.
European High Yield Opportunity
- European high yield offers a good starting yield and benefits from a lower default rate environment.
- Increased fund flows and potential ECB easing further support high yield's attractiveness.