As Morgan Stanley analysts turn tactically cautious on U.S. credit, they recommend that investors sell this rally or at least put hedges in place. Adam Richmond and team said in their March 30 research note titled “Corporate Credit Insights: Fade the Rally” that they believe the risk/reward is less attractive in HY than in IG or loans.
Credit rally leaves risk assets in a “sweet spot” for now
Richmond and colleagues argue that credit has rallied as modestly better economic data has alleviated recession concerns and at the same time, central banks have counteracted the growth scare from earlier this year with aggressive action / rhetoric. Thus, they believe risk assets are in a “sweet spot” for now, though they are not sure how long...
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