High yield fundamentals positive, but market susceptible to shifts in sentiment

The pickup in market volatility in the first two months of 2018 as fears about inflation, valuation levels and diminishing central bank largesse took their toll on investor sentiment has led some investment professionals to warn that the stage is now set for a protracted correction in credit risk premia.

At Eaton Vance, we believe this view to be too pessimistic. Clearly, we are moving towards the end of the credit cycle, but – in the case of global high-yield bonds – we see a number of factors which are supportive of the near-term prospects for the asset class.

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