Man Group's Mike Scott: Winners and losers in global high yield

'Finding good houses in bad neighbourhoods'

The unpredictable policymaking of the US administration is creating considerable uncertainty across financial markets. However, this is accelerating trends we have seen in global credit markets for some time.

Rather than an exogenous shock that will see a sustained reversion to pre-April spread levels, recent events have highlighted key indicators of weakening economic conditions and increasing dispersion. Multi-asset investors divided over equity outlook seek value in fixed income US high yield (HY) has been priced for perfection, with spreads remaining near all-time tights (around 300 basis points) since Q4 2023, implying very low probability of an uptick in defaults or slowing growth in the US. However, European spreads have had at least some bearishness implied by spread levels, whi...