Junkiest Debt Rallies as Investors Brush Off Fed: Credit Weekly

Credit investors have decided that they’re more than willing to fight the Federal Reserve as the central bank vows to keep rates high.

Total returns from leveraged loans and CCC rated junk bonds have rallied strongly this year, outstripping their investment-grade counterparts in recent months as the risk of a severe recession fades. Those gains come even as Fed Chair Jerome Powell has signaled he’s prepared to raise rates even further if he has to.

“The resiliency of the economy is certainly a story that has positively surprised a lot of investors,” said Frank Ossino, a portfolio manager at ...