Constructive on credit - for now

Constructive on credit – for now

Nicolas Trindade, manager of the AXA Sterling Credit Short Duration Bond fund, explains why credit spreads in the fixed income sector could tighten further, as valuations continue to rise.

European Central Bank President Mario Draghi’s “Whatever it takes to preserve the euro” speech two years ago, combined with ‘QE infinity’, prompted a strong rally in equity, credit, and government bond markets. Once more, this period has illustrated very well the positive correlation between the strong performance of risk assets and the Federal Reserve’s aggressive expansion of its balance sheet. Even more remarkably, risk assets’ standout performance happened against a backdrop of very low volatility; this low volatility over the last two years having been artificially engineered by cen...