FICC Focus

Phil Brendel, a Senior Distressed Analyst at Bloomberg Intelligence, shares insights on distressed debt dynamics, highlighting the low levels of distressed opportunities amid tight high-yield spreads. Nagisa Balluku, a Senior Litigation Analyst, dives into recent bankruptcies, including STG Logistics and First Brands, discussing legal intricacies and disputes. They also tackle the implications of Hertz's Supreme Court petition denial and examine Saks Global's Chapter 11 challenges, all while considering what might disrupt the current credit rally.

In this discussion, Paul Mehta, Head of Leveraged Credit at Aberdeen Investments, shares his expertise on the evolving landscape of leveraged loans and private credit. He highlights how private credit is providing new financing alternatives, alongside the significant role of CLOs in the market. Paul discusses projections for loan returns in 2026, comparing them to high-yield bonds, and delves into the implications of private credit on public market defaults. Listeners can gain insights into market dynamics and investment opportunities ahead.

Maxwell Grinacoff, Head of US Equity Derivatives Research at UBS, shares invaluable insights into the current dynamics of equity derivatives. He explains how AI concentration has driven low SPX correlation despite high single-stock volatility. They delve into the rise of derivative-based ETFs and retail trading, revealing how these trends are reshaping market flows. Grinacoff also discusses strategic trades, including a compelling bet on Nasdaq volatility over S&P, and the significant implications of structured products in today's market.

Darrell Duffie, a Stanford professor and monetary policy expert, joins the conversation to dissect current Federal Reserve practices. He emphasizes the crucial link between reserves and the payment system, explaining why large reserves are now necessary. The talk dives into the Fed's shift to Treasury bills, the stigma surrounding its lending facilities, and how these factors can impact market liquidity. Duffie also previews his research on reserve levels affecting payment timings and potential solutions to reduce stigma in Federal funding.

Andrew Axelrod, Founder and CEO of Axar Capital Management, shares insights into the credit market's evolution and the ongoing challenges of distressed ownership. He discusses the concept of 'zombie owners' and how they misalign incentives, complicating recoveries. Axelrod also highlights the difference in reactions among banks, CLOs, and direct lenders, while emphasizing the benefits of private credit's non-mark-to-market approach. Open about labor market risks, he warns investors about potential inflation revival and urges focus on restructuring distressed firms in 2026.

Elias Haddad, Global Head of Market Strategy at Brown Brothers Harriman, joins the discussion to dissect currency trends for 2026. He highlights how the dollar may weaken under dovish Fed policies and rising fiscal stress. The duo explores the dollar-yen dynamic, with Elias making a compelling case for yen strength due to Japan's fiscal health. They also share a bullish outlook for the Australian dollar, driven by domestic activity. Don't miss their insights into euro prospects and the challenges facing the British pound!

Yelena Shulyatyeva, a Senior US economist at the Conference Board with over 20 years of experience, shares insightful predictions about the US economy. She expects a significant slowdown in consumer spending due to tariffs impacting inflation. Discussing the labor market, Yelena highlights hiring freezes and risks to jobs. She also examines the long-term productivity boost from AI, despite initial increases in inequality. The conversation covers potential future rate cuts and the Federal Reserve's independence amid evolving economic conditions.

Phoenix Kalen, the global head of emerging market research at Société Générale, shares her insights into the future of EM local rates and FX. She discusses the drivers behind 2025’s expected outperformance, highlighting inflows and favorable fundamentals. Kalen explores the dynamics of dollar strength and suggests that frontier markets, especially in LATAM and Turkey, present high-carry opportunities. Additionally, she analyzes specific country risks in the context of upcoming elections and evaluates the fiscal landscape for emerging markets.

David Eichhorn, CEO of NISA Investment Advisors, shares insights from his extensive career in fixed income and liability management. He emphasizes that not all excess returns equate to alpha, discussing the importance of proper benchmarking. Eichhorn dives into derivative overlays for liability hedging, the evolution of pension management, and the demand-driven challenges in long credit issuance. He also critiques market interventions and stresses the significance of providing liquidity while navigating structural market risks.

Winnie Cisar, Global Head of Strategy at CreditSights, John McClain, Global Co-Head of High Yield at Goldman Sachs Asset Management, and Meghan Robson, Head of U.S. Credit Strategy at BNP Paribas delve into the high-yield market outlook. They discuss spread widening and consumer health, with Meghan highlighting K-shaped risks. John shares his sector preferences, favoring non-bank financials, while Winnie emphasizes media over leisure. The panel also explores the impact of private credit on public markets and shares can't-miss trades for 2026.