Portfolio Manager
Stay informed on Credit investing
Stay ahead with our newsletter on the latest in credit investing.
• Quarterly outlook
Credit outlook: When Pollyanna met Cassandra
This quarter’s title captures the competing narratives shaping credit markets: Pollyanna points to resilient fundamentals, supportive technicals and strong demand for yield, while Cassandra warns that tight valuations leave little room for disappointment.
Authors
CIO High Yield, Portfolio Manager
Top keywords
Summary
- Robust fundamentals meet a more hawkish policy backdrop
- Tight spreads mask what is going on under the hood
- Valuations leave the asymmetry unattractive
On the face of it, the performance of credit this year has been nothing short of remarkable. Be it private credit jitters, AI disruption fears or geopolitical chaos – the market has shown little real concern. For all the noise, spreads look set to end the quarter wrapped around multi-year tights in most places.
During our most recent credit quarterly outlook, we found ourselves in broad agreement on many topics. But on other themes – including the AI endgame, geopolitics and private credit – we see a true divergence of opinion, ranging from Pollyanna-like optimism to predictions of impending disaster akin to Cassandra.
For us, the AI debate remains the million-dollar question. Or should that be the trillion-dollar question? In a short space of time, we are seeing widespread adoption and it’s already deeply embedded in our daily lives. There can be little disagreement that this is game-changing technology. But will the vast investments actually pay off? We can’t and won’t try to settle that here; the more useful story for now is the widening dispersion within the AI complex, not the binary boom-or-bust call that so many seem keen to make.
In our outlook, we set out our latest thinking on credit market fundamentals, technicals and valuations, and what they mean for portfolio positioning heading into the second half – with some input from Pollyanna and Cassandra1 .
Footnote
1Pollyanna stands for cheerful optimism, while Cassandra represents warnings of trouble ahead that others dismiss.
Discover credits
Important information
THIS WEBSITE IS SOLELY INTENDED FOR PROFESSIONAL INVESTORS, WHICH HAS THE MEANING ASCRIBED TO IT IN THE SECURITIES AND FUTURES ORDINANCE (CAP. 571 OF THE LAWS OF HONG KONG) AND ITS SUBSIDIARY LEGISLATION. Investment involves risks. Past performance is not indicative of future performance. The information contained in this website is provided for reference only and does not constitute investment advice or an offer or solicitation to buy or sell in any securities or to adopt any investment strategy. Investors should not base their investment decisions solely on the information provided on this website and are advised to seek independent advice (including advice on tax implications) before making any investment decisions. Investors should ensure they fully understand the risks associated with the investment products and should also consider their own investment objectives and risk tolerance level. The investment decision is yours. You should not invest unless the intermediary who sells you the investment products has advised you that it is suitable for you and has explained how it is consistent with your investment objectives. Please refer to the relevant offering documents or other legal documents for further details including the risk factors. This website is published by Robeco Hong Kong Limited which is regulated by the Hong Kong Securities and Futures Commission (“SFC”) (CE No. APU851). This website has not been reviewed by the SFC. No assurance can be given that the investment objective of any investment products will be achieved. No representation or promise as to the performance of any investment products or the return on an investment is made. The value of investments may fluctuate. Past performance, projections, or forecasts included in this website should not be regarded as guarantees or indications of future performance, and no express or implied warranty is provided. The contents of this website are based on sources believed to be reliable, but due to the nature of information delivery technology and the necessity of using multiple data sources, including third party content, their accuracy is not guaranteed. The opinions expressed are as of the date shown above and may change as market conditions evolve, and are subject to change without notice. These opinions may differ from those of other Robeco investment professionals. Robeco accepts no liability for any direct, indirect, or consequential loss arising from the use of this material or any comments, opinions, or estimates contained herein. Robeco has no duty to update this website or any website content. Materials on this website may not be reproduced, distributed, or published without prior written permission from Robeco. Unless otherwise specified, Source: Robeco.
