EV Forward: Credit Markets

Timely insights from portfolio managers and industry experts on key financial, economic and political issues.

The views expressed in these posts are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Eaton Vance disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Eaton Vance are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance strategy. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness.

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      By Vishal Khanduja, CFADirector of Investment Grade Fixed-Income Portfolio Management and Trading, Calvert Research and Management

      Boston - We believe the credit markets face heightened geopolitical and trade risk, while central banks may now be more limited in their ability to support economic fundamentals and control market swings.

      At some point, the uncertainties facing the global economy and surrounding issues like the U.S.-China trade conflict, Brexit and U.S. politics could start to impact fundamentals.

      If Fed rate cuts represent the start of an easing cycle rather than just a mid-cycle adjustment, then we anticipate a steepening yield curve and a continued upward trend in inflation.

      Under this scenario, we are maintaining a conservative stance on the view that we are late in the credit cycle and credit spreads are very tight.

      Despite this conservative stance, we expect that active investors can still identify specific, attractive opportunities until credit markets offer improved valuations more broadly.