For some, the selloff in investment-grade may already offer buying opportunities.
The rout in some sectors “looks a bit extreme,” said Nachu Chockalingam, a senior credit portfolio manager at Federated Hermes, which oversees 466.8 billion pounds ($636 billion). Financial issuers should benefit from the move in rates, and some borrowers’ yield curves seem too steep after 10-year securities underperformed intermediate maturities, she added.
She concurs, however, that the high-grade slump can be justified by spike in government yields and increased supply of bonds. And with inflation readings surprising to the upside, bets for faster, sooner policy tightening are growing in the developed world.
“We see turbulence in spreads as higher rates inflict pain in general risk sentiment through the equity market like a repeat of end-2018” said Shanawaz Bhimji, senior fixed-income strategist at ABN Amro NV.
This article was provided by Bloomberg News.