Janus Henderson: Thoughts and bonds - a balancing act
Cautious central banks should help sustain range-bound to modestly higher yields, even as they reverse accommodative monetary policy. However, a more aggressive than expected reversal could trigger an upward spike in volatility
Range-bound rates and low volatility should continue to drive demand for corporate credit. Still, valuations are expensive and drivers of significant spread tightening appear limited
We expect a lower return environment for corporate credit in 2018 and carry to drive returns. Given rich valuations and the asymmetric risk profile of credit investing, default avoidance will be critical
For the Q1 2018 issue please click here.