Andrew Sheets, Head of Corporate Credit Research, and Lisa Shalett, Chief Investment Officer for Morgan Stanley Wealth Management, discuss the implications of American exceptionalism on fixed income markets. They analyze the divergence between strong and weak companies and households, noting record-high asset levels relative to debt. The conversation explores the risks and opportunities within the credit market, particularly in high-yield and private credit, and the potential for increased capital intensity in the tech sector. Finally, they debate the role of bonds in portfolio construction, considering the changing correlations between stocks and bonds and the implications for the 60/40 portfolio strategy.
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