CVC Credit Perspectives – Attractive opportunities across global credit – Q3 2024

• Risk asset classes continue to perform strongly as markets become increasingly optimistic that a soft landing is possible.
• The US economic outlook appears more mixed, and the future direction of the country, both economically and politically, could turn on a dime depending on the election outcome.
• The European macro outlook remains challenged, with traditional stalwarts such as France and Germany faltering. In the UK all eyes have switched to the Budget which will be a crucial litmus test for the new Labour government.

While at the start of the year markets miscalculated the timing and speed of interest rate cuts, we are now seeing inflation trending towards central bank targets, which should lead to further rate cuts this year. The Federal Reserve (“Fed”), European Central Bank (“ECB”) and Bank of England (“BoE”) have all continued to signal an “easing off the brakes” approach to rate cutting, which suggests we will see a gradual movement towards neutrality. All three central banks have indicated rate cuts are likely to continue in Q4, though we wouldn’t expect to see another ‘jumbo’ rate cut as we saw from the Fed in September. The easing of monetary conditions is expected to reinvigorate M&A and IPO activity after several muted years, creating new opportunities in the market. However, as recent developments have demonstrated, the situation remains fluid and susceptible to rapid changes.

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