FICC Focus Bloomberg Intelligence

Carry has been the primary driver of EM risk premia in recent years, yet the landscape may be shifting as growth improves, inflation recedes and geopolitical uncertainty takes hold. In this month’s EM Lens & Look-Through podcast, Managing Director of Emerging Markets at TCW Penny Foley joins Bloomberg Intelligence Chief EM Credit Strategist Damian Sassower to discuss demand for idiosyncratic carry as investors look to EM for uncorrelated streams of future income. Foley and Sassower touch on election risk, foreign positioning, growth dynamics and central-bank policy divergence.

Diversification, lower default rates and elevated yields are just a few of the features of today’s collateralized loan obligation (CLO) landscape, says Senior Managing Director and Head of Structured Credit at Pretium Jerry Ouderkirk. He joins Bloomberg Intelligence analysts Noel Hebert and Sam Geier on this episode of Credit Crunch to discuss the asset class’ current state and its evolution over nearly two decades. The dialog touches on what backdrops drive primary vs. secondary market allocations, default expectations, loan and CLO dynamics, among other topics.

Citadel and MFN competing to fund an unsecured junior DIP financing was just one of the "remarkable" aspects of Yellow Corp's ongoing bankruptcy, according to its Chief Restructuring Officer Matt Doheny. The North Country Capital's founder and president sat with Bloomberg Intelligence's (BI) Phil Brendel to share his philosophies on distressed investing, derived from a wide-ranging career in law, finance, and politics. They dive into two of the most fascinating bankruptcy cases of our time -- Yellow Corp and FTX (5:30). Prior to that, Phil and Noel Hebert of BI discuss the high yield market's strength despite some serious headwinds presented by a "higher for longer" environment. The podcast concludes with BI's Negisa Balluku joining Noel and Phil to tackle the latest developments in bankruptcy courts and distressed situations, including Red Lobster, WeWork, Rite Aid, Diamond Sports, J&J, Yellow, Rackspace, Genesis, and FTX (49:50).

Federal Reserve Chairman Jerome Powell and the Fed are conflicted on economic data, says Morgan Stanley’s Global Head of Marco Strategy Matt Hornbach in this edition of the Bloomberg Intelligence FICC Focus Podcast. Hornbach joins host and BI Chief US Interest Rate Strategist Ira Jersey to discuss the G3+ central bank, currency and interest-rate outlook. Though the totality of recent US economic data has been very confusing, Hornbach thinks a clear trend will soon emerge. The Morgan Stanley base case is for the Fed to start cutting rates in September and do so at each meeting until mid-2025 before stopping. Such an outcome would cause the 10-year Treasury to rally to 3.75%, he said.

Credit markets had a strong nine months of rally, particularly in spreads, although there were yield blips. As the environment changes with rate cuts, led by the ECB, are credit spreads too tight, despite low defaults? Is the rally justified on expected rate cuts for the rest of 2024? In this episode of our Credit Crunch podcast, host Mahesh Bhimalingam, Chief European Credit Strategist at Bloomberg Intelligence, and Axel Potthof, Head of High Yield at Fisch Asset Management, discuss the state of credit after the first ECB cut and the long rally.

They discuss relative value across junk, high grade and loans, fund flows, defaults, rate cuts and yield-curve views in detail. They also address CLOs and their support for loans, while on private credit, they ask if it is taking anything away from public markets.

In this edition of the All Options Considered podcast, BI's Chief Global Derivatives Strategist Tanvir Sandhu is joined by Matthew Tym, Head of Equity Derivatives Trading at Cantor Fitzgerald. Discussion includes the US presidential election and impact of yield enhancement using options on index volatility.