JPMorgan, Charles Schwab Wary of Complacency in Credit Markets
- Spreads not pricing recession, JPM’s Berro stays high quality
- Sweet spot to entry in high-yield bonds is seen as 600-700bps
This article is for subscribers only.
The growing consensus on Wall Street suggests 2023 is going to be ugly and investors are seeing that call play out in the bond market. However, while rates are sounding the alarm on the trajectory for growth next year, credit spreads are painting a very different picture, according to strategists at JPMorgan Chase & Co. and Charles Schwab.
“Where we’re seeing a lot of complacency is on the credit side,” JPMorgan’s Kelsey Berro said in a Bloomberg TV interview. “Spreads in high yield and investment grade still look very much like they are pricing in a soft landing... despite the fact that we have seen the most aggressive tightening cycle since the 1980s.”