In an environment of gradually rising interest rates, we believe High Yield (HY) can perform well.
We regard HY as fairly valued and expect returns in 2018 to be driven largely by coupon and carry.
Given the strong global outlook, an increasingly well-capitalized banking system in the US and Europe, and continuing high levels of corporate debt re-financing, we do not foresee any significant deterioration of credit in 2018.
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