All The Credit, Episode 1—Mike Lillard, Head of PGIM Fixed Income
On the inaugural episode of "All the Credit," Host and Senior Portfolio Manager Mike Collins welcomes Mike Lillard, Head of PGIM Fixed Income and Chief Investment Officer. In this wide-ranging interview, the two discuss the debate over active vs. passive investing, global growth and macro views in 2020, and the firm’s overall view of the top trends and opportunities in the fixed income markets.
The Implications of the U.S.-China Trade Deal Revisited
The completion of the Phase 1 agreement marks a cease fire in the U.S.-China trade war, and the deal underscores several persistent issues that we considered in a white paper published in April 2019. We find that China’s commitments to hike imports from the United States range from those that will be challenging to those that will likely be even more difficult.
Capturing Value in Lower-Rated U.S. High Yield
When evaluating allocations in the current late-cycle environment, the U.S. high yield market remains vastly bifurcated with overvalued BB-rated issues and some deeply discounted weak B- and CCC-rated names. Granted, there are risks to overweighting the lower-quality portion of the market, but given our base case for a prolonged credit cycle, the larger risk to performance could be maintaining overweights to the BB-rated segment of the market, particularly as lower-quality credit spreads imply a far higher default rate than we expect in 2020.
With Brexit All-But Done, Now Comes the Hard Part
The Conservative party’s sweeping victory in the December 13th general election was a landmark event on several fronts. Now, barring the unforeseen, the UK will leave the European Union on January 31, 2020 based on the deal that Prime Minister Johnson previously reached with the EU.