Maggie Lake Talking Markets Episode 33: Are Junk Bonds Flashing Warning Signs? With Tavi Costa.
20 snips
Mar 28, 2025 Tavi Costa, a macro strategist at Crescat Capital, shares his insights into the current state of junk bonds and credit risks in the market. He discusses the concerning rollover in junk bonds and why credit spreads pose an overlooked threat. Tavi provides an outlook on investments in Brazil and Europe, highlighting both opportunities and regulatory challenges. He also delves into the Federal Reserve's role in managing inflation and interest rates amidst market volatility. Get ready for a deep dive into emerging market dynamics!
AI Snips
Chapters
Transcript
Episode notes
Junk Bond Warning
- Tavi Costa observes junk bond spreads below 3%, similar to 2007 before the financial crisis.
- This complacency signals a potential volatility event brewing, especially with tech and consumer discretionary stocks declining.
Different Downturn
- The current market downturn differs from previous ones.
- It involves a rebalancing out of high-performing tech stocks and a potential shift in credit spreads.
Fed's Stance and 2-Year Yields
- The Fed's stance on interest rates is uncertain, despite market expectations of cuts.
- Costa believes the Fed might delay cutting rates, leading to a significant drop in 2-year yields.