An update from the BlackRock Investment Institute, saying that its moved from "overweight" to "neutral" on credit. Blackrock say that yields are not enough to compensate investors for tightening credit conditions.
- Strategically, we are neutral global investment grade. We don’t think yields compensate investors for tightening credit conditions. We are neutral high yield as we see the asset class as more vulnerable to recession risks. Tactically, we’re neutral investment grade due to tightening credit and financial conditions. We’re underweight high yield as we see a recession coming and prefer to be up in quality. We’re overweight local-currency EM debt – we see it as more resilient with monetary policy tightening further along than in DMs.
And:
- "The fallout from the banking sector troubles and further tightening of credit conditions adds to the pressure on public credit but could be a potential boon for private credit"
On equities:
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The BlackRock Investment Institute is an arm of U.S.-based investment firm BlackRock that provides proprietary investment research.
