Wealth Inequality, Volatility Strong Themes In 2016
January 14, 2016
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High Yield. Having benefited greatly from quantitative easing, the credit markets have faced formidable headwinds as monetary policy has become less accommodative. As the carry trade unwinds and market conditions normalize, high yield spreads have widened dramatically. We believe that absent a recession—which we don’t believe is imminent—the high yield market offers attractive value at current levels for accommodative. As the carry trade unwinds and market conditions normalize, high yield spreads have widened dramatically. We believe that absent a recession—which we don’t believe is imminent—the high yield market offers attractive value at current levels for risk-tolerant investors. While history does not always repeat, the high yield asset class has historically performed well during the years following its steepest declines (Figure 4).