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Quarter-End Insights

Our Outlook for the Credit Markets

Widening investment-grade credit spreads and rising interest rates lead to losses.

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  • The basis between U.S. financials and industrials sector credit spreads is holding steady.
  • Whether the Fed begins to reduce its asset-purchase program in the near term or medium term, we expect rates will continue to rise back toward the average real return over inflation.
  • Credit rating changes are being dominated by idiosyncratic issuer activity.

 

David Sekera does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.