A lot of debate over all this but we look at what's happening on the yield curve with twos and tens particularly in focus here as
well. The last time we saw an inversion like this was 2000 when the Fed did raise rates to six and a half percent. And they were
looking at that stage. The market was looking at perhaps 8 percent here as well. But the yield was distorted then by the
healthy state of the Fed's finances. This time it's quite the reverse. How does that distortion now affect things and how much
real kind of attention should the credit markets being paid to this.
Well I think just ISE is healing too. You true. The other we just use a view about how in fact it's going to happen in
September and then beyond. I think the J.P. Morgan house view is that we're going to see some beef. IBEX is quite high in
September followed by a 25 basis point hike each in November December. But you know we what is really clear for us
essentially what is matter more for the credit market is that we are. We are nearer to the end of the high cycle than the
beginning of the high cycle. So that's really what is modern. And also you look at how the Treasury market have behaved. You
have to turn out to be much more. You see what it is. You're dead but it's much more moderate compared to the east. You've
had a year and that actually is a encouraging sign for the year for investors. Also we have to understand that you know he
doesn't own you the market right now. The J.P. Morgan your credit index is now trading closer to 6 percent. So that is
actually quite a tricky level for a lot investor. And that's why I you see that one sees what he did. We started to stabilize.
People started to add on to the risk in particular in the investment we saw.
OK so. So maybe there's the softer CPI print that we got in the US overnight. Does that add to that story of doubling up risk
and being more bullish on Asia credit. Yeah I think you do. Some says you can see that is a sigh of
relief for a lot investor. I think we have seen the J.P. Morgan index being down since September last year. So he has been a
very tough one for everybody. But right now he's going to August. You see that Jackie have actually read Covid by 2
percentage points from that. From the low. Yes. Year to date we still down like 10 percent but is still relieved to see that you
know markets are stabilizing from here. And DAX is really good news. I think obviously the one that people does really cost the
recovery is really these investment great site to help recover high yield for Asia. Still a bit lagging. It does because of
some issue that we still have. You know what is trying to properly point out.
Right. And I was going to get to that strong. You mentioned that we're near the end of the tightening cycle than the beginning.
Are we near enough for junk to look valuable right now. Is there value are the high yield end of the spectrum.
I think for high High Flyers at the spectrum I think to keep doing that we have to understand is really also about
fundamentals. I think in terms of valuation. Yes the sector do looks cheap but I think the other part that we have to also
understand as much as we think that we are near the end of the cycle of life cycle we are still talking about economy was
coming to slow down. And the downside is still that until we see the economy really grow we can be bottoming out. Concern on
credit fundamentals still can be debt. So it does is reason why we are going to second now be our focus is believe more on
investment grade safety and higher just because I think as much as we say that you know the risk is positive for the market. I
think credit fundamentals the credit fundamentals duration especially for the higher side would mean DAX track was abated
from here. Year when you have the hunt for juice as it were and you are in
the investment grade space where do you go. Well I think in the investment grade right now you look at the
investment rate years that she's not that bad. You're talking about even single A you can get 4.5 percent. This is something
that at one point is is how high you is treating. You know just like 1 1 year ago. So this is one thing to understand and vote
for investment grade side. We do see opportunity. We do like defensive sectors such as in the infrastructure and utility. We
also see some financial be very strong. Parent support does not reflect that in the bond prices. Those are the areas that we do
like. I think we also like the copper hybrid. Those are very short dated industrial.
They are still giving you a good enough view to come back to the point on how you are. We totally shy away from high yet answer
is no. Yes. I mean China property is still on a policy call but also China property. We do like the Indian renewable space. We
do like energy names in India and Indonesia. And also you don't dump recovery. I mean you call me opening place in India was ISE
Airport and subsequently money in India China. This on the New Delhi Steel like there
are several. Real quickly in terms of where you think the pain trade is going to be for the bond market. And when you actually
see that peak when it comes to U.S. Treasury yields. Well I think right now you see the way we look at the U.S.
Treasury. You don't normally when we expect that the Fed will start to. But well I think by year
end. I think you see the Treasury market will affect that. I think we'll start to stabilize maybe treat to the two to three
months ahead of time. So probably we all house you should be expecting the Treasury to stabilize this quarter maybe even in
September. And this is why markets started to get centered again at under the risk. And I think also we have to understand that
the market even more technical essentially has set out to be much more favorable going into the fourth quarter. Yeah.