Credit market monthly review March 2017

Insight
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11 April 2017

Despite a March correction, the outlook for US credit remains positive

 

Key points

  • We remain constructive on both USD credit and the credit markets more broadly. While we are now more comfortable with USD Investment Grade than we were at the start of the year, we still prefer USD High Yield because of the superior carry trade.
  • French credit recovered from its February underperformance in March.
  • The outperformance by financials can persist near term, given the scope for further spread compression between financials and non-financials.
  • We do not expect a material negative impact on EUR credit spreads from the European Central Bank’s decision to cut its monthly bond buying programme from €80bn to €60bn from this month.