Fixed income/credit after rates go up

Chimp_and_jeez's picture
Chimp_and_jeez - Certified Professional
AM
Rank: Orangutan | banana points 333

Hi guys:

was just wondering if I can hear about your views on fixed income/credit after rates go up? Are we at a point in the credit cycle where the last 20 years of bond bull market is about to end and reverse? if so, would fixed income/credit investing become a declining industry? what are your thoughts on this?

Thanks!

fixed income
3rd+ Year Analyst - Certified Professional Certified Asset Management Pro

Hedge Fund Interview Course

  • 814 questions across 165 hedge funds. Crowdsourced from over 500,000 members.
  • 11 Detailed Sample Pitches and 10+ hours of video.
  • Trusted by over 1,000 aspiring hedge fund professionals just like you.
learn more

Comments (3)

 
May 25, 2015

Hi,

I think when (or if?) rates go up, there will be much more focus on floating coupon part of fixed income - loans, structured credit etc. However, I would expect the bear market to be much shorter than bull market - rates increase would happen gradually but over years rather than tens of years. On the other hand, I'd say return oriented investors might actually appreciate higher yields and therefore the sector could get a bit more attention.

1st Year Analyst - Certified Professional Certified Asset Management Pro
 
May 27, 2015

^Seconded. I'd think that rates going up would be good for "new" FI investment, as the higher rate environment starts showing the cracks in equities of companies that rode the low rate wave, money will shift out of equities into newly issued, higher yielding corporate debt.

1st Year Associate - Certified Professional Certified Equity Research Pro
 
May 27, 2015

See All Comments - 100% Free

WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)

Hedge Fund Pitch for Interviews