FICC Focus

High-beta asset classes will likely swing on US-centric narratives, but the country’s financial conditions remain supportive despite a less dovish Federal Reserve. Max Kettner, Chief Multi-Asset Strategist at HSBC, joins Bloomberg Intelligence Chief Emerging Markets Credit Strategist Damian Sassower to discuss his investment outlook for 2025, with US equities, high-yield debt and emerging-market credit standing out. Kettner and Sassower touch on trade policy under President-elect Donald Trump, the fiscal challenges facing China, historically tight credit spreads and the continued pursuit of incremental carry.The EM Lens podcast is part of BI’s FICC Focus series. 

“There is one AAA bond that has taken a loss so far in CMBS. There will be plenty more.” Waterfall Asset Management’s Head of ABS Strategy Keerthi Raghavan didn’t mince words in laying out his view of the office real estate market, one of the few corners of the credit universe offering significant distressed opportunities. Raghavan, speaking with Bloomberg Intelligence’s Noel Hebert and Phil Brendel, examined the widely different segments of the commercial real estate market, his data-centric approach to investing and strategies employed amid distressed situations (5:50). Prior to that, Hebert and Brendel highlighted the risks investors take when the market speculation is high, evidenced by historically tight spreads and a dearth of distressed debt. The podcast concludes with BI’s Negisa Balluku joining the two analysts for a round table discussion covering Ligado Networks, Serta Simmons, Party City, Hertz, Incora, and CommScope(1:25:40).Key interview take aways and time stamps: Approach to active portfolio management: Thematic vs. idiosyncratic (00:18:30) Assessing building quality and valuation of an asset (00:34:00) Trading, sourcing and liquidity of CRE credit risk (00:46:40) CRE investor base and price discovery: Valuations of RE vs. CRE debt (00:55:00) Workout process dynamics and misalignment between counterparties (01:08:45) Market outlook and risks over the coming 12-24 months (01:20:30)

Incoming pro-growth policy, while inflationary in nature, could result in a strong credit environment in the eyes of PineBridge Investments’ Global Head of Credit, Steven Oh. Oh joins Bloomberg Intelligence corporate credit strategists Noel Hebert and Sam Geier on this episode of Credit Crunch to walk through various macroeconomic pathways. The conversation touches on central-bank policy expectations and the geopolitical climate, before diving into portfolio composition, sector exposures and the current default landscape.

The path of least resistance continues to be cyclically driven dollar-bullish and euro-dollar-bearish views into early 2025, but that’s a narrative that’s priced in, extended and crowded. Host Audrey Childe-Freeman, Bloomberg Intelligence’s chief G-10 FX strategist, talks to Constantin Bolz, head of G10 FX for UBS’ Chief Investment Office, about what could trigger a turnaround in the euro-dollar fortunes in 2025, with several “known unknown” potential game changers when it comes to how much dollar upside is likely. The two also touch on non-dollar, strong G10 currency convictions, with Bolz favoring the Aussie, the yen and sterling in diversification strategies.

Henry Song, a portfolio manager at Diamond Hill Capital Management specializing in short duration securitized bond strategies, shares insights on the fixed income landscape. He discusses the advantages of shorter-dated bonds amid high interest rates and inflation challenges. The conversation dives into the intricacies of securitized markets versus corporate bonds, highlighting opportunities in asset-backed securities. Additionally, Song touches on the evolving role of technology in trading and the strategic importance of diverse portfolio construction in today's volatile market.

A resilient macroeconomic environment, along with rising M&A activity, have the direct-lending space primed for additional growth in the coming years. Curt Lueker, managing director and head of direct lending at Marathon Asset Management, joins Noel Hebert and Sam Geier of Bloomberg Intelligence on this episode of Credit Crunch to discuss how the firm is capitalizing on its expertise in the core middle-market sector. The conversation dives into the firm’s recent partnership with Webster Bank, the investment committee process, secondary markets, central bank policy and much more.

Ben Emons, founder of Fed Watch Advisors and expert on central banks, joins Bloomberg Intelligence's Ira Jersey and Will Hoffman to discuss market implications following the recent FOMC meeting. They delve into how potential Trump policies may lead to heightened volatility in 2025. The conversation also covers the intricacies of interest rates and their effects on Treasuries, alongside currency hedging strategies amid liquidity concerns. Insights into the Fed's adjustments and the ripple effects on global markets offer a comprehensive financial outlook.

A new administration and the specter of inflation are among the levers for municipal bonds moving into next year. On this month’s Masters of the Muniverse, Eric Kazatsky and co-host Karen Altamirano are joined by three bank strategists with differing takes on the municipal landscape for 2025.Peter Degroot, head of municipal research and strategy at JPMorgan; Vikram Rai, who leads municipal-markets strategy at Wells Fargo; and Mikhail Foux, chief of municipal research at Barclays reflect on this year’s muni performance and discuss their calls for the year ahead.

Daniel Pietrzak, KKR partner and global head of private credit, shares his extensive knowledge on the booming $2 trillion private credit market. He explores the surge of investment-grade players entering private credit and its implications for asset allocation. The conversation delves into the strategic capital deployment in Asia, particularly India, and highlights the current risk environment shaped by geopolitical dynamics. Pietrzak also emphasizes the importance of disciplined underwriting and collaborative risk management in navigating this evolving landscape.

With credit markets enjoying a strong 2024 and with many uncertainties, charting the course for 2025 is a challenge. Will US trade policies slow Fed cuts and will ECB easing stay the course as priced, and what will this mean for credit? Will stubborn US yields filter into Europe? In this episode of our Credit Crunch podcast, host Mahesh Bhimalingam, chief European credit strategist at Bloomberg Intelligence, and Marc Rovers, Head of European Credit at Legal & General Investment Management, discuss the state of credit and the 2025 outlook for US and Europe.They tackle relative value across credit on both sides of the Atlantic; high yield and high grade; fund flows and supply; defaults and ratings; fundamental and curve views. They also detail the risks across the US, UK and Europe, including German and French politics.