2013 proved a better year for credit markets than expected by many. The coming year has the potential to surprise too, although the gains are unlikely to match those of the previous year.
2014 will be an interesting year given the rising pressures on interest rates, particularly in the US, while in Europe inflation stays low and growth also remains, stubbornly, low. The good news is that the current environment is quite favourable for the credit markets.
According to Chris Bullock, co-manager of the Euro Corporate Bond Fund and Euro High Yield Bond Funds, given the expectations of low default rates, improving corporate confidence, but some risk to interest rates, the high yield sector has the potential to outperform investment grade bonds. Overall 2014 could be another fairly solid year for the credit markets, although there may be a few bumps along the way.
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