Euro Credit management: what are the keys to success in volatile periods?
- 26 March 2025 (3 min read)
What will happen in 2025 with Donald Trump?
Donald Trump's arrival in office brings uncertainty and volatility. His return to power and the standoff he intends to create with the United States' major trading partners will heavily influence market sentiment in 2025. The European equity and fixed income markets were significantly impacted by widespread uncertainty before and after the US elections, but a clear rebound followed the inauguration. Meanwhile, the credit market remained very resilient during this period. We anticipate that in the coming months, there will still be significant volatility in interest rates, consistent with what we have experienced over the past two years. Credit may also be affected by the uncertainties related to the trade war initiated by the United States, the main trading partner of the Eurozone.
We believe a flexible, unconstrained approach to investing in euro credit may be worth considering in order to adapt to this uncertain environment.
How to adapt to volatility?
We welcome volatility, as it allows us to implement our views much more dynamically than in a sluggish market. Due to our flexible investment process, we see volatility as an opportunity.
In 2025, we expect credit to remain an attractive asset class, and we are seeing growing interest from our clients. Of course, absolute yields should fall from the peaks seen a few months ago but will still remain very attractive from a historical perspective. Against this backdrop of a soft-landing forecast by economists, we expect 1% growth in the eurozone in 2025, which is, admittedly, weak but still positive.
Given the uncertainties ahead, particularly with Donald Trump's return to power, we believe that taking an actively managed, unconstrained and dynamic approach that can leverage flexibility could help investors navigate effectively through these market conditions.
Source: This article is based on an interview with Quantalys, February 2025
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