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Global High Yield Update – Q2 2024

Executive Summary:

  • Data releases corroborating a US soft-landing narrative where growth has been slowing, but still robust enough to avoid an earnings recession, have been supportive for credit.
  • The lack of shareholder-friendly excesses and large problem sectors in this cycle, remarkably strong corporate earnings, solid fundamentals and improving credit-lending conditions are all supportive for the high yield asset class to experience a longer, but shallower, defaults cycle.
  • Global high yield (GHY) spreads can remain well anchored at the lower ends of the range, even as the market reassesses the prospect of rate cuts. Yields in the range of 7.5% are still at reasonably healthy levels and total return-oriented investors need not position too conservatively.

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