Stabilization in bond yields. Although the discourse of the central banks is still belligerent with inflation, we do not expect more rate hikes than 0.25 in the remainder of the year. Traditionally, the IRR has peaked close to the peak of short-term rates.
We continue to see attractive entry points in corporate fixed income in dollars, with hedged currency, and in euros.
Selective opportunities in the higher quality tranche of High Yield, although there is a risk of defaults among the worst quality issuers. The reduction of liquidity in an environment of monetary tightening can increase default rate.
- Credit spreads at medium levels, both in European and American bonds.
- Rally in IRR in government bonds, both European and American.
- High Yield in both euros and dollars can be harmed by rising default rates. BB rated bonds seem attractive.
- Selectively, emerging economies with foreign debt.