Part 5/8:
Transitioning to fixed income, Cameron highlighted the current environment of low credit spreads that signal a risk appetite potentially overshooting market realities. Credit markets have previously been buoyed by optimistic GDP estimates, and there’s a worry that rising yields might not necessarily indicate robust economic growth.
Cameron forecasts continuing volatility in interest rates in 2025, which will be influenced by the growth outlook and could wreak havoc across equity markets. Given the current environment and impending refinancing challenges for corporations, looming risks are associated with defaults and elevated corporate debt levels.