How big a threat is inflation?

The wait is over. UK Chancellor Rachel Reeves delivered her much anticipated November Budget on Wednesday, ending weeks of rumours and leaks that had created a general feeling that all measures were on the table – now investors, businesses and taxpayers alike can fill in the empty cells on their spreadsheets and calculate what’s left.

The private credit exposure of life insurance firms, particularly those with private equity (PE) owners, has been drawing the market’s attention in recent weeks.

For much of the past year, the AI story in markets has been one of unrestrained optimism. Firms have been racing to spend on chips, infrastructure, and data centres, and equity valuations have generally rewarded those with the boldest capital expenditure plans.

October brought the first serious bout of volatility in corporate bond markets for some time, with two high-profile US bankruptcies raising fears of a more systemic issue in credit.

Economic data this week will be weird, and for central bankers it might not be wonderful. In the US, not only will we endure the aberration of non-farm payrolls (NFP) data being published on a Thursday, but we’ll also get several late macro data releases with the government shutdown put off until at least January.

For some time now, collateralised loan obligations (CLOs) have in our view been one of the standout risk-adjusted opportunities in all of fixed income, and in recent years (including this one) their performance has lived up to that billing.