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Trump’s election will lengthen the business cycle, overheat the US economy and might trigger more Fed rate hikes. Corporate credit quality keeps deteriorating. Still, we need a bigger shock than Trump to derail global credit markets. The Fed might do it in the medium term. We remain positioned close to a neutral beta while trading the ranges in the short term.
For our first chart extraordinaire in a series of three, Lukas Daalder, Chief Investment Officer of Robeco Investment Solutions, picked this one from the Economist magazine, entitled ‘No boom without a bust’. This beautifully (and also somewhat terrifyingly) illustrates the enormity of the level of privately held Chinese debt outside the financial sector.
Following the bond market sell-off after the US election Robeco Global Total Return Bond Fund has made some changes in the portfolio. Portfolio manager Kommer van Trigt explains the recent adjustments in the portfolio.
The idea of a global ‘debt supercycle’ is not as scary as it sounds, but three things do threaten stability if borrowing spirals out of control, Robeco’s experts advised asset owners at a recent webinar.
Debt gets a bad rap, creating images of human figures bound in chains… but is it really that bad? It is a lot more complex than that, says asset allocator and debt investor Lukas Daalder in his analysis of the thorny subject for Robeco’s new five-year outlook.