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Video: Global high-yield bond outlook for 2019

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      By Jeffrey D. Mueller, Portfolio Manager, High Yield Team

      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.