BlackRock Shifts to US Junk Bonds With ECB Set to Slow Cuts.
BlackRock Inc. is taking advantage of recent outperformance in European credit markets to sell some junk bonds there and buy more in the US in its global funds.
That’s according to James Turner, co-head of European fundamental fixed income at BlackRock. The world’s biggest asset manager, with $11.5 trillion of assets, is making the changes in its global funds to now be more evenly weighted between Europe and US, where previously it favored Europe.
The yield premium that investors demand to hold US junk bonds rather than Treasuries widened sharply recently as investors fretted that President Donald Trump’s tariffs would weigh on growth there. While European junk bond spreads have also widened, they’ve been cushioned by hopes that government spending on defense and infrastructure, led by Germany, will give a torpid economy the boost it needs.
BlackRock sees an opportunity in the huge multiyear-high cash piles that have accumulated in recent times; they reckon US and EU money market assets sit at $7 trillion and $1.3 trillion, respectively. Investors can switch from cash to fixed income and, unlike in the easy-money era, they no longer need to extend duration or accept lower credit quality to be rewarded.
Source: Finace.Yahoo
