How the “higher for longer” world influences where this investor puts cash to work
The following was produced and published as part of Livewire’s The Pitch on 19 June 2024.
With spreads so tight and rates so high, where is the best place to make your cash work for you?
Interest rate markets have been extremely volatile – with the number of cuts priced into the US Federal Reserve’s tool reduced from 6 to 1 in the space of just four months. Meanwhile, benchmark investment grade (highest quality) credit spreads in the U.S. and Europe are at their tightest levels in two years – suggesting investors in this asset class are willing to pay up (at historic highs in some cases) for that yield. It also suggests that investors are no longer pricing a deep recession.
But should investors be more worried than the pricing suggests?
In this edition of The Pitch, Ares Investment Management’s Teiki Benveniste shares his views on the “higher for longer” world he believes we are now in, why he thinks spreads are so tight in some markets, and what it all means for where Ares is finding opportunities in the global credit markets.