17 Jul 2020

Weekly commentary: Why we like credit

We recently moved to a strategic overweight on credit after being underweight for the past year. Cheaper valuations compensated for the risk of corporate defaults and downgrades in the wake of the Covid-19 pandemic, in our view. We also prefer credit over equities on a tactical basis. Extraordinary central bank easing, including renewed purchases of corporate debt, underpin the asset class.

 

Key points

Overweight on credit
We like credit on a strategic basis as valuations compensate for default risks and we prefer credit over equities on a tactical basis.
Containment and mobility
We are tracking the interplay of containment measures and mobility changes on activity as economies have started to reopen.
 
Data watch
Markets this week will focus on a key European Union summit as leaders debate the region’s economic recovery package.
 

Read this week's latest commentary


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