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Video: Global high-yield bond outlook for 2019

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The views expressed in these posts are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Eaton Vance disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Eaton Vance are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance fund. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. Past performance is no guarantee of future results.

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      By Jeffrey D. Mueller, High Yield Portfolio Manager, Eaton Vance Advisers International Ltd.

      London - My outlook for 2019 is one of continued unwinding of central bank policy, including the Federal Reserve reducing its balance sheet and the European Central Bank (ECB) stepping away from its quantitative easing program.

      In markets, we saw volatility increase in the second part of 2018. We expect that to continue in 2019 and for the high-yield markets, that would mean a bias toward widening credit spreads.

      (Tap or click the image below to view the video.)

      Blog Image Mueller Outlook Jan 22

      On the flipside, from a fundamental perspective, fundamentals within the high-yield asset class remain generally healthy overall. We don't expect a material increase in default rates in 2019. Regarding high-yield valuation levels, spreads are still tighter than the historical average, but we still entered 2019 in a better place than we were during most of 2018.

      Ultimately, we believe the income generation of an asset class like high yield will continue to provide benefits to investors and ultimately lead to what we expect will be positive returns for the asset class in 2019.