Bonds
T. Rowe Cuts High-Grade Credit Bets on 2025 Inflation Volatility
- International bond head Orchard says threat not yet priced in
- Favors bank loans, securitized credit; underweight high grades
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T. Rowe Price Group Inc. is in risk-off form in parts of the credit markets, anticipating pressure on yields from higher inflation next year will make the stability of bank loans preferable to the volatility of bonds.
Markets need more time to fully price in the “higher inflation path that we’re on,” Ken Orchard, head of international fixed income at T. Rowe, said during a markets briefing by the $1.61 trillion money manager on Tuesday. He favors the reduced duration risk of bank loans and securitized credit, and is underweight on global investment-grade bonds and dollar-denominated emerging market sovereign and corporate bonds.