Investors have to accept oil market volatility is here to stay

Attractive buy territory

A three-fear factor - China, the anticipated Fed rate rise and oil - were behind the risk-off flurry that drove the global high yield bond market down for four consecutive months this summer and into an attractive 'buy' territory.

We think the worries were exaggerated. Investors feared the Chinese slowdown was out of control, but though the Chinese authorities have been poor at communication they have made sensible decisions, easing fiscal and monetary policy and supporting sectors that needed it. In the US, the Fed has postponed interest rate rises and made it clear that when they come they will be gentle and incremental. Oil is more tricky. The negative impact of lower oil prices is measured and priced immediately through investors selling energy company shares or bonds. Positive impact is also harder to e...