Balancing Yield And Risk For A Transitioning Credit Cycle
Doubling of debt in the investment grade sector is a top risk that the co-manager of Loomis, Sayles & Company’s Core Plus Bond strategies is navigating late cycle.
- 2020 outlook: US and global economies should avoid a recession in 2020, but growth is expected to slow.
- Follow the debt and you may find the next problem: Be on the alert for sectors that have been increasing debt faster than trend.
- Investment grade corporate debt has risen significantly during this recovery.
- Select opportunities remain in high yield and bank loans.
- Volatility flare-ups could occur from monetary or trade policy mishaps, 2020 elections, or global growth slowdown.
Bonds may carry one or more of the following risks: credit, interest rate (as interest rates rise bond prices usually fall), inflation and liquidity. Below investment grade bonds may be subject to greater risks (including the risk of default) than other fixed income securities.