This podcast discusses the resilience of credit markets despite volatility in other markets, specifically the S&P 500 and Treasury yields. The speaker, Morgan Stanley's Chief Fixed Income Strategist, explains that while credit markets have shown low beta (less volatility) so far, this could change if economic growth concerns intensify, particularly if soft economic data weakens further. The speaker notes that current economic growth projections, while revised downward to 1.5% in 2025 and 1.2% in 2026 due to policy changes, are still considered credit-friendly, though nearing the lower end of their comfort zone. Cooling growth may also limit corporate debt supply, supporting market technicals. However, increased recession probabilities could lead to higher credit beta. The podcast concludes by suggesting that the low beta of credit markets may not persist.
