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NEW YORK, March 04, 2022 (GLOBE NEWSWIRE) — Guggenheim Investments, the global asset management and investment advisory business of Guggenheim Partners, today provided its First Quarter 2022 High-Yield and Bank Loan Outlook. Titled “Credit Returns in the Upcoming Fed Hiking Cycle,” the report explores the outlook for credit as the Federal Reserve (Fed) begins raising interest rates.
Among the highlights in the 13-page report:
- Given broadening price pressures in the economy, there is growing urgency for the Fed to begin a rate hiking cycle in 2022 and shrink the size of its balance sheet.
- While the situation in Ukraine remains a wild card, we now expect the Fed will hike by at least four times this year, with the risk of larger or more frequent hikes if the inflation data continues to run hot.
- Credit investors need not fear a Fed tightening cycle, since rate hikes typically occur when growth is strong and defaults are low.
- We believe leveraged credit continues to offer an attractive opportunity for fixed-income portfolio as the Fed is only about to begin withdrawing monetary policy accommodation. Both sectors carry features that can support returns as the Fed is raising interest rates, namely spread compression in high- yield corporates and floating coupons in bank loans.
- History shows that high-yield corporate bonds have outperformed loans in recent tightening cycles due primarily to spread compression.
- The recent backup in…
Full story available on Benzinga.com
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