Srikanth Sankaran – Morgan Stanley’s Head of U.S. and European Credit Strategy sees market optimism on progress in cease-fire talks between Russia-Ukraine as temporary “focus” in action.
“The focus will definitely shift back to the central bank hawkishness,” Sankaran said in an interview with Bloomberg TV’s Jonathan Ferro Tuesday.
The rally is “likely to fade over the near term,” he said, as the market starts to price in the magnitude of the Federal Reserve’s upcoming rate hikes.
“From the risk-markets perspective, I think that’s where there is still a bit of conundrum to be resolved,” Sankaran said.
A key measure of U.S. corporate credit risk fell for a second straight day on Tuesday. Markeit
A key measure of U.S. corporate credit risk is falling for a second straight day on Tuesday. The spread on the Markit CDX North American Investment Grade Index, which declines as credit risk drops, tightened 3.02 basis points to 67.2 as of 11:15 a.m. New York time. That’s the lowest level since early February when adjusting for the index roll on March 20.
The Markit CDX North American High Yield Index price, which rises as credit risk declines, rose 0.6 points to 105.6.
Amid growing concern of inflation, geopolitical concerns and the economic outlook, investors sentiment toward junk bonds grew the most since 2008, according to a survey by Bank of America Corp.
