The Insight by Oaktree Capital Conversations: Recalibration with Danielle Poli, Julio Herrera, Mark Jacobs, and Todd Molz
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Jan 15, 2025 Danielle Poli, an Assistant Portfolio Manager for Oaktree's Global Credit Strategy, discusses the lasting impact of high Treasury yields on credit investments. Julio Herrera, specializing in Emerging Markets Debt, offers insights on China's recent stimulus efforts and its effects on the economy. Mark Jacobs shares his outlook on the real estate market, focusing on the multifamily sector's resilience amid rising interest rates. Together, they explore investment opportunities in a volatile landscape while emphasizing the importance of diligent research and strategic management.
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Bifurcated US Economy
- The US economy shows bifurcation: strong stock market performance vs. struggles of debt-laden companies and lower-income consumers.
- This makes the Fed's job complex, supporting higher rates despite some economic slowdown.
Credit Return Drivers
- Income has driven credit returns, with sub-investment grade instruments yielding over 8%.
- Economic strength and spread tightening further boosted returns into double digits.
Focus on Yield
- Consider the whole package: yield, price, and spread when assessing credit investments.
- Focus on potential returns from yield and price appreciation, even with tight spreads.