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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.

 

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