The US election result impact on high yield markets

James Tomlins   09/11/2016   Comments Off on The US election result impact on high yield markets

After the surprise election result, market reaction within the European high yield market has been surprisingly muted. Here are a few key moves that show how the news is being digested.

high-yield-impact

In general, the market seems to be pricing in little to no impact for European risk premia, and even for the more potentially directly impacted companies in Latin America, the re-pricing has been very mild.

It seems investors are looking through any short term uncertainty and seeing looser fiscal policy as a boon to nominal growth, something that should be positive for most high yield businesses. Cemex, for example, has a major presence in the US domestic market – in one of those ironies, it could end up being a major supplier to a Trump infrastructure programme.

The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested. Past performance is not a guide to future performance.


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About the author, James Tomlins

Years in the bond markets:
13
Specialist subjects:
High yield corporate bonds
Likes:
Texas hold 'em, skiing, cars, history, pub quizzes
Heroes:
Lord Palmerston, Horatio Nelson