LIVE MARKETS-European credit spreads to outperform US, say Goldman

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EUROPEAN CREDIT SPREADS TO OUTPERFORM U.S., SAY GOLDMAN

Credit has performed well on both sides of the Atlantic in the aftermath of the April tariff turmoil, with both investment grade and junk spreads back to near historically tight levels.

From here however, Goldman see European spreads outperforming and recommend investors go overweight relative to the U.S.

It's not really a positive argument for Europe, more a case of choosing the lesser of two weevils - to quote Patrick O'Brian's Jack Aubrey.

As Goldman puts its, "All are expensive, but one is more vulnerable", and they think relative value should be "guided primarily by sensitivity to downside risk since there’s little upside left to capture."

The July U.S. employment report offered strong evidence that higher tariffs have started to weigh on U.S. growth.

"Meanwhile, the US-EU trade deal exceeded expectations, prompting (Goldman's) European economists to upgrade their European growth forecasts to 1.2% this year, above both consensus and long-run potential."

(Alun John)

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