Inflation – although far from the peaks reached in 2022 – remains quite high in both the US and (to a lesser extent) the Eurozone, and growth remains robust; therefore a sustained cycle of cuts by the Fed and ECB seems unlikely. The ECB started cutting rates in June, but will probably slow down unless the Fed accelerates.
Credit has had a great performance in recent months, but the high cost of refinancing is putting pressure on some companies. In addition, elections in the EU have brought European risk back to the markets, albeit not high.
In this scenario, it is important to take a selective approach to credit markets.
Watch the full analysis by Gabriele Foà (Global Credit Portfolio Manager, Algebris Investments).
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