Franklin Templeton Sees Junk Complacency Over Election, Rates
- Contested vote is biggest nearby threat to high-yield bonds
- Fiscal and monetary boost may unleash inflation, higher rates
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Credit markets aren’t properly pricing in election and Federal Reserve policy risk, according to Sonal Desai, chief investment officer for fixed income at Franklin Templeton.
“There’s a feeling of complacency. That’s why I am a bit concerned post-election,” said Desai, whose firm oversaw $661 billion in fixed-income assets as of July 31. From the threat of a contested election to the longer term potential for rates to rise, credit-market valuations underestimate risk, Desai said in an interview on Thursday.