“We’re seeing people implement that either through currency hedged strategies or maybe now they’re willing to take on the local currency because they think the dollar could be a bit weaker going forward,” she said.
Whenever there’s growth in the economy and rates rise as a result of that to combat the inflation, Schenone said it’s great for credit risk.
“We see credit spreads tightening in and you’ll see high-yield and investment grade outperform other categories,” she said.
The Fed, chaired by Janet Yellen, said on Wednesday it was preparing to start reducing its $4,500bn balance sheet later in 2017, although it didn’t give a specific date.
Schenone said this was an exciting prospect.
“I think everyone’s looking forward to if the Fed starts tapering their balance sheet – what is that going to mean,” she said. “But we’re still seeing all this foreign demand for US fixed income securities kind of keeping a lid on rising rates. So we think they might drift a little higher, but you’re not going to not going to go back to six, seven, eight percent yields anytime soon.”
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