Deep Dive: Pressure on high yield bonds is 'easing' as hiking cycle nears peak

Preference for long-duration bonds

High yield bonds have sold off over the last year due to high inflation, rising interest rates and economic uncertainty, leading several fixed income managers to take advantage of the wide spreads.

But now that it appears the hiking cycle may be nearing its end - as signalled by both the Federal Reserve and Bank of England - ‘junk bonds' have started to look less attractive. Deep Dive: Funds-of-funds can help overcome PE investment barriers Nathan Sweeney, CIO of multi-asset at Marlborough, said the company is reducing its exposure to high yield bonds "after a strong run over the past year". Although it had no exposure to high yield over the first half of 2022, "last summer we saw an attractive entry point after spreads over government bonds reached 600 basis points". He note...