Corporate Bonds
Investors should modestly underweight equities in their portfolios and look to turn more aggressively defensive once the whites of the recession’s eyes are visible. We think that will happen within the next few months.
The ECB is changing its tone, but don’t call it a pivot. Slower cuts, sticky disinflation, and a soft growth patch shift the opportunity set. We break down the tactical bond trades and why EUR/USD dips are still for buying.
This year’s corporate bond sell off has hit high-yield more than investment grade, and high-yield spreads have turned relatively more attractive as a result.
US Treasuries typically outperform both equities and global government bonds during downturns. Recent political shifts could lessen that outperformance this cycle, but we doubt it will disappear completely.