While credit may have limited upside potential, several factors could lead to stronger-than-expected market performance in 2025. These factors include a more moderate approach to US policy than anticipated, improved market funding conditions like relaxed bank capital requirements, active mergers and acquisitions that strengthen weaker credits, unexpectedly robust growth in Europe and China, and substantial interest rate cuts by major central banks, even amidst ongoing growth. Together, these elements could produce surprisingly high total returns for credit assets, potentially surpassing those of equities.
