Wider credit spreads present a bump in the road - ANZ

According to analysts at ANZ, the recent rise in credit spreads has increased concerns that risk aversion will rise in a sustained fashion.

Key Quotes

“Our analysis shows that the widening in spreads may have further to go. However, both the level of growth and the abundance of liquidity mean that this move will be contained; and any spike in volatility won’t be persistent, but rather it will provide fresh buying opportunities for cyclical risk assets.”

“We maintain our positive outlook on the AUD, but reduce some of the cyclical exposure in light of the risk of a temporary deterioration in sentiment.”

“More broadly, our framework continues to suggest that the cycle is getting into its late stage, a more sustained move in volatility is on the distant horizon, but while growth sustains markets will carry on.”