One Foot on the Brake, One on the Gas
While strong technical factors continue to drive the corporate bond market in the short term, portfolio managers are also sharpening their sell lists.
The average credit spread in the Morningstar Corporate Bond Index widened 3 basis points last week to +136. Markets softened as a steady stream of disappointing earnings and downward guidance badgered investor sentiment. However, stronger-than-expected economic metrics along with continued technical factors have largely helped to offset a significant widening in credit spreads.
In a completely unscientific poll of clients we met with over the past three weeks, portfolio managers appear to be driving their portfolios with one foot on the brake and one on the gas. While strong market technical factors continue to drive the corporate bond market in the short term, portfolio managers are attempting to balance the desire to maintain enough risk exposure to match corporate bond index returns. However, they are sharpening their sell lists as their trigger fingers become increasingly itchy.
David Sekera does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.