We may not have quite reached the moment when credit is “glaringly” cheap, but it does feel as though we have entered the zone.

US markets are relatively simple: inflation or recession? Find yourself on the right side of that debate and one can anticipate the Federal Reserve’s likely action with relative confidence. Equity, credit and rates market moves should then be fairly predictable.

The market is keen to read any macro weakness as an excuse for the Federal Reserve to pivot on their rate hike path. However we don’t think this is likely. Macro data remains relatively robust, so the Fed will be determined to get rates up, which markets have priced in. While the economy is no doubt slowing, we think the US will avoid a deep recession for these reasons.

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