What’s the carry-on in high yield markets? Outlook 2024

At the start of the year, we were forecasting a higher default rate than the trend we have ultimately seen play out, with defaults set to end the year around 3% to 4% – and we see 2024 playing out similarly. We see defaults sitting around 3% to 5%, with our most pessimistic case seeing 7%.

Even if defaults do end up breaching 5% and creeping towards 7%, we don’t see this as particularly worrying as it won’t change the fundamentals of the high yield market and will only come about from US Federal Reserve monetary policy, which has been priced into corporate valuations, instead of, as of yet, unknown increased economic hardship. 

Read in full: What’s the carry-on in high yield markets?

The views expressed are those of the author at the date of publication unless otherwise indicated, which are subject to change, and is not investment advice.