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By Etrit VLLASALIJA, Michael HABIB and Franz LATHUILLERIE, Fixed Income Investment Analysts, Capital Group
Banks are the largest sector of the global investment grade market, representing around 27% of the index by market value. Whilst macroeconomic conditions strongly influenced 2023 bank credit results and is expected to have a similar impact this year, we currently have a favourable view of the sector. Any future volatility is, in our view, likely to provide an opportunity to build exposure.
To understand where the opportunities lie, an understanding of various market scenarios is imperative. Market expectations have shifted from scenario 1, a narrative of policy rates remaining higher for longer, towards scenario 2, anticipating a soft...
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