All the Credit

Navigating the volatile landscape of geopolitics and its implications on emerging markets has become critical in this uncertain economic climate. In this episode, we provide an in-depth analysis of the current geopolitical landscape, its profound impact on emerging markets, and the risk factors on our radar. This episode features PGIM Fixed Income’s Cathy Hepworth, CFA, Head of Emerging Markets Debt, Mehill Marku, Lead Geopolitical Analyst, and host, Tom Porcelli, Chief U.S. Economist. Recorded on April 23, 2024.

With significant repricing across all commercial real estate (CRE) sectors, normalizing rent growth, and rising expenses, it’s time to revisit and reassess the CRE space. Get our thoughts on the CRE market today, implications for the banking sector, and risk factors we’re monitoring. This episode features PGIM Fixed Income’s David Jiang, U.S. Investment Grade Credit Research Analyst, Jason Pan, CFA, FSA, Securitized Products Credit Research Analyst, and host, Tom Porcelli, Chief U.S. Economist. Recorded on March 12, 2024.

Despite fluctuating post-pandemic interest rates, the U.S. economy has shown unexpected resilience. Contrary to predictions of a possible recession the U.S. economy continues to show signs of economic growth. In this episode of All the Credit, Tom Porcelli, Chief U.S. Economist, hosts Guillermo Felices, PhD and George Jiranek, CFA, two of PGIM Fixed Income’s global investment strategists, for an analysis of U.S. interest rate fluctuations and their ripple effect on the economy, including responses across sectors, shifts in consumer financial health, and labor market dynamics. Recorded on February 23, 2024.

In the current climate of rising premiums and inflationary pressures, the insurance industry faces significant challenges. In this episode of All the Credit, Tom Porcelli, Chief U.S. Economist, and Pinto Suri, U.S. Investment Grade Credit Research Analyst, examine the complexities of the auto and home insurance sectors, challenges facing issuers in the post-pandemic environment, effects on insurers' pricing strategies, implications for CPI, and considerations for investors. Recorded on January 25, 2024.

In recent months, GLP-1 drugs have been thrust into the spotlight, amplified by increased media attention and several headline-grabbing comments from large retailers. In this episode of All the Credit®, host Brian Barnhurst, CFA, Co-Head of Credit Research, is joined by U.S. Leveraged Finance Credit Research Analysts, Elizabeth Halpin, CFA, Richard Kus, CFA, and Scott Swanson, CFA, to consider the investment implications of GLP-1s across fixed income markets and industries. Recorded on December 19, 2023. This content is not intended to be a substitute for professional medical or health advice, diagnosis, or treatment, and does not constitute medical or other professional advice in any form.

Rates have sharply increased in the past 18 months and at PGIM Fixed Income, we anticipate they will remain elevated. In this episode of All the Credit, Brian Barnhurst, CFA, Co-Head of Credit Research, is joined by guests Mick Meyler, Head of Developed Market Rates, and Tom Porcelli, Chief U.S. Economist, to examine the core factors supporting our view of higher-for-longer rates. The trio also discuss the end of the hiking cycle, weigh the impact of fiscal deficits on long-term rates, and explore the interplay between rates, curve shape, and the economy. Recorded on November 17, 2023.

While U.S. money center banks have emerged as an attractive subsegment of the U.S. investment grade corporate market, European banks face unique challenges sustaining their market prominence. Given the fragility of the Eurozone’s economy, with an anticipated growth of 0.5% both this year and next, the spotlight on the relative attractiveness of European banks has made its way to the forefront. In this episode of All the Credit ®, host Michael Roper, CFA, European Investment Grade Corporate Bond Portfolio Manager, along with guests Chris Alquiza, CFA, U.S. Investment Grade Corporate Bond Portfolio Manager, and James Hyde, European Investment Grade Credit Research Analyst, dissect the perception of risk and relative value between U.S. banks and EU banks from a U.S. market perspective, how trading relationships might be impacted by this, and provide bottom-up thoughts on European bank fundamentals and where we think they’re headed. Recorded on October 20, 2023.

Investors could be pardoned if they have whiplash, but the fact is that interest rates go through paradigm shifts. Indeed, they just migrated from a decade of ultra-low levels back to what may be a sustained period back “home” in their long-term 3-5% range. Just as investors never caught up with the 40-year secular decline in rates, the inverted curve could be with us for some time, leaving a boon for yield-curve strategies. Furthermore, with the vast majority of rate hikes behind us, market volatility is set to fall. A re-emergence of the “search for yield” is likely to follow, providing a tail wind for spread product and further boosting returns. These newly restored higher yields should fuel a continuation of the bull market that began in Q4 2022, one driven not by a rapid drop in yields, but simply driven by yield itself. After all, in bonds, yield is nearly destiny. Learn more in this episode of All the Credit®, featuring Robert Tipp, CFA, Chief Investment Strategist and Head of Global Bonds, and hosted by Tom Porcelli, Chief U.S. Economist, and Mike Collins, CFA, Senior Portfolio Manager, Multi-Sector Strategies. Recorded on September 20, 2023.

With our macro base case calling for below trend, but positive growth and elevated inflation, we see a fairly healthy environment for credit and credit returns looking forward. In this episode of All the Credit, we’ll take a closer look at the high-quality credit spectrum, where solid nominal yields, reasonable credit spreads, and durable credit fundamentals could be attractive to fixed income investors. Alternatively, even if the economy proves less resilient than expected, tactically allocating to high-quality credit can provide reasonable insulation from outside drawdowns and downturns. Hosts Brian Barnhurst, CFA, Co-Head of Credit Research, and Mike Collins, CFA, Senior Portfolio Manager, Multi-Sector Strategies, have invited three of our senior investment professionals to discuss the opportunities they see within Investment Grade Corporates, Securitized Credit, and Municipal Bonds: Dave Del Vecchio, Co-Head of U.S. Investment Grade Corporate Bonds, Edwin Wilches, CFA, Co-Head of Securitized Products, and Sean McCarthy, Head of Municipal Bond Research. Recorded on September 21, 2023.

Amid the dog days of summer, we’re serving up the latest episode of All the Credit on an industry that produces the alcoholic beverage of choice for a large swath of consumers—beer. Who are the main players in the big brewing industry and what’s their market share? How are their products holding their own in a market saturated with options such as craft brews, seltzers, and non-alcoholic substitutes? PGIM Fixed Income’s Elitza Fleischman, CPA, U.S. Investment Grade Credit Research Analyst, covers these details, plus trends in growth, pricing, and margins for the biggest brewers. We wrap up with our portfolio positioning from returning co-host, Alyssa Davis, U.S. Investment Grade Corporate Bond Portfolio Manager. Recorded on July 25, 2023.

Quantitative tightening (QT), the unwinding of the large scale of purchases of a broad range of financial assets by central banks, has become a feature of monetary policy since the great financial crisis. Though central banks around the world have already started this process, given the many distractors in the market, such as the global banking crisis and the U.S. debt ceiling brinkmanship, QT has gone on somewhat unnoticed. That said, as we near the end of hiking cycles and the paths of short-term interest rates become clearer, we expect markets to shift their focus to QT. Exactly how do central banks intend to unwind their bloated balance sheets? PGIM Fixed Income’s Katharine Neiss, PhD, Deputy Head of Global Economics and Chief European Economist, and Bethany Payne, CFA, Developed Market Rates Portfolio Manager, join this episode of All the Credit® to help us better understand QT and explore its potential market and economic impacts. First, we’ll take a look at quantitative easing (QE), the process by which central banks expand their balance sheets by buying up financial assets on a massive scale, why they do this, and how this tool fits into their policy options to help achieve their price stability mandates. Then we’ll look at the reasons why central banks are so motivated to unwind their balance sheets and reverse QE, the constraints they face, and the potential risks to financial markets. We’ll wrap up with some thoughts on how successful we think QE and QT have been thus far and if central banks will be able to turn to these tools as readily in the future. Michael Roper, CFA, European Investment Grade Corporate Bond Portfolio Manager, returns to All the Credit® as host, alongside Mike Collins, CFA, Senior Portfolio Manager for Multi-Sector Strategies. Recorded on June 9, 2023.

Just a few months ago, the market was confident that post global financial crisis, financial sector reforms, and regulatory scrutiny ensured that the U.S. banking system was rock solid, and that the next cycle's culprit would emanate from elsewhere. However, banking is once again front and center as investors weigh systematic risks from another prospective real estate crunch—this time in the commercial property sector. In this episode of PGIM Fixed Income’s All the Credit®, with guests Jason Pan, CFA, FSA, Securitized Products Credit Research Analyst, and David Jiang, U.S. Investment Grade Credit Research Analyst, we’ll outline the scale of the potential problem, including the cadence of decay and potential flashpoints in commercial real estate, and discuss potential transmission through the banking system, extension of credit, and the real economy. Brian Barnhurst, CFA, Co-Head of Credit Research, returns to All the Credit® as host, alongside Mike Collins, CFA, Senior Portfolio Manager. Recorded on June 9, 2023.

With “x-date” looming, concerns about a potential default are weighing on financial markets and the global economy. As the nation’s solvency hangs in the balance, Daleep Singh, PGIM Fixed Income’s Chief Global Economist and Head of Macroeconomic Research, joins this episode of All the Credit® to discuss this U.S. government fiscal fiasco. To begin, Daleep lays the groundwork with a brief history of the U.S. debt ceiling, including some of the recent impasses that may act as a guide for the current situation. Daleep then provides his take on the potential outcomes of this debt debacle with estimates on the probabilities of each outcome. Our discussion wraps up with considerations on the most likely path forward for the U.S. government, and the economic, market, and investment implications that investors should watch for. Alyssa Davis, U.S. Investment Grade Corporate Bond Portfolio Manager, cohosts this episode. Recorded on May 8, 2023.

After years of strict COVID lockdowns, China’s domestic consumer economy is rapidly re-opening. Meanwhile, global manufacturing—normally an area of Chinese dominance—is being challenged by tighter credit conditions after years of progressive central bank hawkishness. In addition, the country still finds itself in the global geopolitical crosshairs as highly restrictive policies against China remain. In this episode of All the Creditâ, PGIM Fixed Income’s Gerwin Bell, PhD, Lead Economist for Asia, discusses China’s re-opening and how it could be different from recoveries from past decades. Gerwin also provides his 2023 GDP and inflation forecasts for China, assesses the country's policy initiatives and what they could mean for its interest rates and currency, and shares his long-term growth outlook. Michael Roper, CFA, European Investment Grade Corporate Bond Portfolio Manager, joins as co-host for this timely discussion. Recorded on April 24, 2023.

Recent global banking failures shook investors and markets alike, leaving many wondering if we’re witnessing a repeat of the 2008 global financial crisis. In this episode of All the Credit®, Mick Meyler, Head of Developed Market Rates, and David Jiang, U.S. Investment Grade Credit Research Analyst, review the events of this latest crisis, discuss the potential for more bank runs, outline potential regulatory responses, and assess the impacts on bank earnings and credit fundamentals. The duo also unpacks the recent swings in interest rates and central bank policy expectations, attempts to measure the impact of now-tighter credit conditions, and more. Lindsay Rosner, CFA, Multi-Sector Portfolio Manager, joins this episode as a special co-host and provides a summary of our portfolio positioning, particularly in the financial sector, while also accounting for heightened recession risk. Recorded on March 24, 2023.

A confluence of higher debt levels, tightening central bank policies, and weakening growth are raising red flags around borrower credit quality as signs of financial strain are beginning to emerge. Against this backdrop and as a part of our integrated credit research processes, we remain on the lookout for potential problems across corporate borrowers, consumers, and commercial real estate, both in the near and long term. Listen to this episode of PGIM Fixed Income’s All the Credit® podcast as Brian Barnhurst, CFA, Co-Head of Credit Research, and Gary Horbacz, CFA, Head of Securitized Products Research, share their insights on credit fundamental trends and vulnerabilities across the asset class, along with outlooks on defaults and loss expectations. Recorded on February 23, 2023.

The residential real estate market directly or indirectly impacts everyone. After all, everyone is born short a house. Home prices and construction activity also largely impact economic growth, wealth, inflation, and, for fixed income investors, residential mortgage-backed securities (RMBS). With the market suddenly in a downturn, should investors be prepared for lower house prices and rents? Declines in home construction and sales? Increased delinquencies and defaults on mortgages? In this episode of All the Credit®, Kaustub Samant, Head of Mortgage Credit Research at PGIM Fixed Income, reviews the current state of the residential real estate market, along with the recent history of home price appreciation (HPA) and changes in rental rates. Mr. Samant examines trends in the market and affordability issues, and the looming decline of residential prices and rents. We also discuss implications for GDP and inflation, mortgage default vulnerabilities, and shifts we’ve made within the capital structure in lieu of changes in the market for mortgage-related fixed income securities. Recorded on January 12, 2023.

Earlier this year, PGIM Fixed Income developed an inflation indicator tool that uses various economic variables to segregate the supply factors that explain the change in inflation, from those associated with demand. The end result helps us gain insight into the future direction of core goods inflation. On this episode of All the Credit®, Guillermo Felices, PhD, Global Investment Strategist, explains our proprietary inflation model and reviews the findings. Guillermo also: Recorded on December 9, 2022.

For the first time in decades, long-term interest rates have broken out of their steady downtrend with recent spikes. Is this a temporary irregularity? Or has the rate environment reverted to a paradigm of sustained higher yields and returns from bonds? In this episode, Robert Tipp, CFA, examines how we arrived at “low for long,” and why it’s given way to generational highs in growth, inflation, and interest rates, creating a strategic buying opportunity in fixed income. Robert also provides his thoughts on potential interest rate paths and soft versus hard landing possibilities in 2023. Recorded on November 17, 2022.

On this special edition of All the Credit®, Mike Collins hands the mic to PGIM Fixed Income’s Co-Chief Investment Officer, Greg Peters, and newly appointed Chief Global Economist, Daleep Singh, to discuss: Recorded on October 12, 2022.