FICC Focus

Credit and high yield had first quarter losses due to the Iran war impact, especially on rates. Will 2Q revert those losses, and why? Mahesh Bhimalingam, Bloomberg Intelligence global head of credit strategy, discusses the results of the BI 2Q26 Investor Survey and the market outlook with Manuel Schoeffler, Head of High Yield at Deka Investment GmbH. They discuss valuations and central bank actions, along with distress and default rates. This podcast also covers survey results on investor positioning, sentiment, key return drivers, supply forecasts and relative value across asset classes (high grade vs. junk), geography (Europe vs. US), ratings and sectors. The Credit Crunch podcast is part of BI’s FICC Focus series. Listen on Apple Podcasts and Spotify.

"Troubled businesses don't turn around on a dime. They took years to get messed up. They got worse through the restructuring when they were capital starved." observed Jon F. Weber, founder of Jon F Weber & Co., "A lender should not have the expectation that upon pouring in liquidity and an improved capital structure, they're going to immediately improve. We're in the reality business...We have to establish what can be realistically achieved with a 70%-80% probability and align awards, budgets and all of those things around those outcomes." Jon and Jon F Weber & Co. Board Director Alvaro Aguirre shared their well-honed insights with Bloomberg Intelligence's Negisa Balluku and Phil Brendel, as they delved into their recent paper "From Creditor to Owner: Adapting an Ownership Playbook." They highlight the need for lenders to act swiftly and decisively to prepare for potential ownership, as well as the common pitfalls that can arise during this transition. The podcast concludes (1:02:40) with BI's Noel Hebert joining Negisa and Phil to discuss the latest developments in Hertz, First Brands, New Fortress Energy, Multi-Color Corp., Serta, and Telesat.

The Federal Reserve still has an easing bias and may lower rates another 50-bps this year, says Vincent Reinhart, chief economist for BNY Investments on this Macro Matter's edition of the FICC Focus podcast series. Reinhart joins host Ira Jersey, Chief US Interest Rate Strategist for Bloomberg Intelligence to discuss the BNY Investment's view on the economy and central bank actions as uncertainty remains high around energy prices. The two discuss the economic situation and how the path of nominal growth may remain steady even with the inflation/real growth mix shifting. Reinhart tells of cadence of work while he was with the Fed's Monetary Affairs staff and as secretary of the Federal Open Market Committee.

The US-Iran ceasefire and associated relief in risk aversion and pull-back in oil prices may be a first step out of the sterling-dollar bear cycle of the past few weeks. There will be cyclical relief as the market adjusts back to less hawkish Bank of England rate expectations which were hurting the pound via the stagflation narrative and structural relief as the expected monetary-fiscal policy mix means less reliance on fiscal stimulus to boost the economy and avoid any fiscal credibility issue that's become a constant consideration for the pound. In this episode of FX Moment, BI's Chief FX Strategist Audrey Childe-Freeman and Bloomberg Economics Chief UK Economist Dan Hanson discuss the U-turn on the Bank of England interest rate and growth expectations in the Iran war context, fiscal policy as well as how UK politics could shape sterling's near to mid-term dynamics.

Sovereign balance sheets should come under renewed pressure as the war-induced oil shock forces EM governments to take extraordinary measures aimed at actively defending their domestic economies. Fabio Natalucci, CEO of the Andersen Institute for Finance & Economics, joins Damian Sassower, Bloomberg Intelligence’s chief EM fixed income strategist, to assess the risks facing EM creditors as the war in Iran endures. Natalucci and Sassower differentiate between level and trend when discussing the medium-term impact to EM growth and inflation expectations, with potential for yields to decline once recession probabilities reach a boiling point.