FICC Focus Credit Crunch: Vontobel’s Jackson Talks Credit Relative Value
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Aug 11, 2025 Andrew Jackson, Head of Investments at Vontobel, shares his extensive experience in fixed income and credit markets. He emphasizes the importance of active management and alpha vs. beta strategies, particularly in emerging markets. Jackson discusses the unpredictability of the bond market and the challenges posed by macroeconomic shifts. He highlights the current robust state of credit fundamentals in the U.S. and Europe, while also addressing potential risks in private credit. The conversation reveals insights on navigating liquidity and strategic trading in volatile environments.
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Rethinking Sovereign Debt Dynamics
- U.S. sovereign debt sustainability is deteriorating while many emerging market sovereigns have stronger metrics.
- That shift matters for long-term relative value between EM and DM allocations.
Buy Deep OTM Credit Vol For Protection
- Buy deep out‑of‑the‑money credit volatility as low-cost protection while staying invested.
- Use small OTM payer positions to hedge tail risk without heavy negative carry.
Strong Credit Fundamentals, Few Vulnerabilities
- Credit fundamentals across corporates and financials are generally strong today.
- That strength leaves fewer obvious credit risks but narrows where returns can be found.