By Reuters
Schroders upgrades global corporate bonds on easing U.S. recession risks . REUTERS
(Reuters)
- Schroders upgraded its outlook for global corporate bonds to
'neutral' from 'negative' on Wednesday and maintained its positive view
on global equities as it expects reduced risks of a U.S. recession.
The
British asset manager upgraded its stance on both U.S. investment grade
and high yield bonds to 'neutral' from 'negative' backed by stabilising
growth, rising demand and positive consumer sentiment data.
In May, Moody's
downgraded
the U.S. sovereign credit, while President Trump's tariff policies has
caused some volatility in benchmark Treasury bonds, which in turn have
lifted corporate bond yields.
U.S.
junk bond issuance totaled $28.9 billion in May, the most for a month
since September 2024, according to brokerage J.P. Morgan.
Schroders
said the "biggest risks seem to have passed" for U.S. investment grade
credit but pointed out that valuations remain high for domestic
corporate bonds overall.
"Now, the market can pay more attention to deregulation and government spending," it added.
Earlier
this month, data from the Treasury Department showed foreign investors'
holdings of U.S. Treasuries showed a modest decline in April from
record levels of U.S. debt.
The
asset manager reiterated its positive stance on global equities,
including U.S. equities. It maintained a negative outlook on the dollar.
"While
economic uncertainty persists, we think downside risks are contained
and the risk of recession this year is lower," they added.
Reporting by Siddarth S in Bengaluru; Editing by Tasim Zahid
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