Friday Workout - Hawk/Dove; Club deal for Seals; Dial LBO for Merger
- Chris Haffenden
As expected, Jerome Powell was reappointed as Federal Reserve Chairman this week. His comments however were not – turning substantially more hawkish on inflation, with the FOMC minutes released on Wednesday reinforcing the change in mood. A faster taper and earlier and sharper moves in hiking rates is now likely. With bond yields set to rise as rates normalise, absolute yields for HY should also rise, but what about spreads? I correctly called the top for EHY in late summer, but with European single-B real yields turning negative in the last month, are you being paid enough for the risk?