Credit Market: The New Equilibrium

Investors must manage liquidity and risk. It is especially important for those making illiquid investments to ensure that they are getting compensated with the appropriate return profile and know the exit time and mechanisms.

Amid higher interest rates, fears of inflation and rising energy prices in the first half of 2022, the markets saw a very large move in fixed rate credits, particularly investment-grade and high-yield credits.

A deep recession is not yet certain. A shallow recession is more likely. We will be in a higher interest rate environment for longer, which is already impacting companies.

High-end consumer businesses have done well even in the high inflation environment. The housing market was impacted by higher mortgage rates and rents. Restaurants and gyms are performing well despite high labor costs and food prices.

Young people must have an open mind about investing. They should have no bias against any asset class nor fall in love with it.

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