IGHG

The sudden stop to markets induced by COVID-19 caused a substantial repricing of credit risk globally, and central banks, treasuries, and ministries of finance around the world responded unequivocally.As central banks eased liquidity concerns and governments alleviated solvency risks through a massive fiscal response, credit spreads tightened rapidly within more defensive sectors.The focus now is on the economic cycle, as basic industries, capital goods, energy, and other cyclical sectors in both developed and emerging markets are still trading at spreads wide to historical levels, particularly in the lower-quality segments of the market.

We downgrade investment grade credit to neutral and increase our overweight in high yield as we see volatility rising after a rally in risk assets.Negotiations over a new U.S. fiscal package looked to have stalled. We still expect a sizable package, but risks of a no-deal outcome are growing.Markets will focus on the European Central Bank’s updated projections and any policy implications. The traditional U.S. election campaign season kicks off.

On the surface, it appears as though interest rate hedged ETFs need rates to rise to be successful. The ProShares Investment Grade—Intr Rt Hdgd (IGHG B-) proves otherwise.

When it comes to an economic downturn, small companies without an S&P Global Rating could be hit first, according to S&P Global Market Intelligence. A credit rating signals a company's ability to repay its debt and those without the rating could potential...