FICC Focus

Credit markets have had a strong year, a few blips notwithstanding. After the ECB cut rates twice, the BOE once and with the Fed about to embark on a long cutting cycle, are credit spreads too tight and priced for perfection? Is the rally in yields justified on expected rate cuts until 1H25? In this episode of our Credit Crunch podcast, host Mahesh Bhimalingam, chief European credit strategist at Bloomberg Intelligence and Jamie Irvine, investment director at abdrn, discuss the state of credit across the US, UK, and Europe.They tackle relative value across credit in different currencies; junk and high grade; fund flows and supply; defaults and ratings; and fundamental views. They also address the sterling credit market, and the impact of elections across the US, UK and Europe.

Audrey Childe-Freeman, chief G-10 FX strategist at Bloomberg Intelligence, and Stephen Chiu, chief Asia FX and rates strategist, dive into the complexities of de-dollarization amid looming U.S. elections. They explore how geopolitical shifts, particularly China's push for the yuan, impact global currency dynamics. The duo also discusses central banks' increasing gold purchases in response to inflation and doubts about the dollar's future credibility, highlighting the ongoing tension between the U.S. and China.

In this edition of the All Options Considered podcast, BI's Chief Global Derivatives Strategist Tanvir Sandhu covers the VIX at 65 being due to market technicals and unreflective of fundamentals, as well as the support for rates volatility from uncertainty around the pace and extent that policy rates decline rather than the direction of travel, which is clear cut.

Emerging Market corporate and quasi-sovereign debt is outperforming the broader EM sovereign-credit complex, as the asset class returns to favor following years of below-average bond issuance. In this month’s EM Lens & Look-Through podcast, Emerging Market Portfolio Manager at Schroders Autumn Graham joins Bloomberg Intelligence’s Damian Sassower, chief EM credit strategist, to discuss the risk-return tradeoff in EM corporate credit. Graham and Sassower touch on issuer fundamentals, market depth, foreign positioning, geopolitical risk and the impact of deglobalization.This podcast is part of BI’s FICC Focus series.

Macro credit trends tend to be based on more of a feel than precise numbers. In this latest episode of the Credit Crunch podcast, Mahesh Bhimalingam, Chief European Credit Strategist and Heema Patel, Senior Credit Strategy Associate at Bloomberg Intelligence, delve into proprietary research and data on BI STRTE to make macro credit very precise. Explore their novel spread-prediction model with market and macroeconomic drivers, insights on index metrics -- default rates, rating quality/drift and credit ratios. They also discuss if green bonds are trading at a premium or discount, a methodology contrasting with the conventional greenium calculations.Lastly, they address the main derivative play in credit, the cash-CDS basis and gain perspective on current market patterns and uncover alpha-generating opportunities.

Stuart Paul, an economist for Bloomberg Economics with expertise in US and Canadian economies, discusses the complexities of Canada’s current economic landscape. He highlights the impact of immigration on housing crises and rising mortgage rates. Paul dives into the unique monetary policy frameworks of the Bank of Canada, contrasting them with other central banks. He also analyzes Canada’s fiscal sustainability, revealing its advantage over the US, and addresses the delicate balancing act of managing interest rates amid economic growth concerns.

As we edge closer to a US Federal Reserve rate decision and a presidential election, municipal credit will get more attention. In this Masters of the Muniverse podcast, hosts and Bloomberg Intelligence analysts Eric Kazatsky and Karen Altamirano talk to Jennifer Johnston, director of research, municipal bonds, at Franklin Templeton Fixed Income. She discusses how technology enhances credit research and why tax policy, slowing tax collections, falling revenues and pressured hospital margins are among areas of concern in 2H and beyond.

Join Michael Gross and Bruce Spohler, co-founders with nearly two decades in corporate lending, alongside credit analysts Noel Hebert and Sam Geier from Bloomberg Intelligence. They dive into innovative underwriting strategies and the unique challenges of specialty financing. The discussion covers the impact of interest rate changes, the shifting landscape of private credit, and the importance of thorough collateral assessments. Discover how proactive approaches can identify opportunities amid economic uncertainty and how regulatory measures affect the future of private credit.

James H. M. Sprayregen, Vice Chairman of Hilco Global and founder of the restructuring practice at Kirkland & Ellis, shares insights alongside Bloomberg Intelligence analysts Phil Brendel and Negisa Balluku. They discuss the aggressive tactics corporate boards should adopt in distressed situations to maximize value. Key topics include the evolving restructuring landscape, the significant impact of recent Supreme Court rulings, and the implications of current economic challenges on distressed debt. The trio also reviews notable bankruptcy cases like Spirit Airlines and SVB Financial.

Audrey Childe-Freeman, Bloomberg Intelligence's chief G-10 FX strategist, teams up with Stephen Chiu, the chief Asia FX and Rates strategist, to explore the unwinding of the dollar-yen carry trade. They discuss how shifts in Fed and BOJ policies are triggering extreme FX movements. The duo also analyzes the negative dollar-yen narrative alongside potential yuan dynamics, highlighting their BEER model as a lens for understanding these fluctuations. Their insights provide a captivating look into current currency trends and future implications.