FICC Focus Credit Crunch: Investor Survey 1Q - Fed, Earnings, Tech Supply
Feb 11, 2026
Ashwin Palta, a Global High Yield Portfolio Manager at BNY Newton with deep leveraged finance experience, discusses why he is cautiously bullish. They cover tight high-yield spreads, Fed moves and earnings as key drivers. Conversation also touches on supply forecasts, regional preferences between US and Europe, and sector and rating positioning.
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Rich Spreads But Yield Still Attractive
- Investors overwhelmingly judge valuations as rich, with a 70% net 'rich' read driven by tight spreads.
- Ashwin notes high yield yield levels still offer decent total return despite compressed spreads because duration is very short.
Earnings, Not Fed Cuts, Drive Sentiment
- Earnings and geopolitics ranked as the top drivers for returns this quarter, ahead of Fed cuts and European recession risk.
- Managers prioritize company fundamentals during earnings season, especially for single‑B names where one bad quarter can move prices substantially.
Defend By Positioning, Not Cash
- Stay fully invested but express defensiveness via ratings, sector and duration allocations rather than cash.
- Ashwin recommends using allocations to single‑Bs or IG hybrids and shorter duration to manage risk while harvesting carry.