Credit Market Outlook

Apollo Chief Economist

I will be on Bloomberg TV today at 7:30 am to preview the December CPI data, and the key question for the Fed and markets is if a recession is needed to get inflation all the way back to the FOMC’s 2% inflation target. Economic models, such as the Phillips curve, would say that a much higher unemployment rate is needed to get inflation down to 2%. But maybe economists are too wedded to their models? What if inflation is mainly driven by supply shocks that are going to sort themselves out over time without any need for additional demand destruction (as suggested by Fed papers here, here, and here).

So far, inflation has been trending lower without any increase in the unemployment rate, suggesting that we are in the soft landing scenario. A continued solid economy with falling inflation and steady corporate earnings is good news for both IG and HY credit. But with inflation at 7.1%, the Fed will continue to be hawkish, and as a result, markets will likely remain volatile as we go through 2023.

Download our latest credit market outlook here.

Credit market outlook

This presentation may not be distributed, transmitted or otherwise communicated to others in whole or in part without the express consent of Apollo Global Management, Inc. (together with its subsidiaries, “Apollo”).  

Apollo makes no representation or warranty, expressed or implied, with respect to the accuracy, reasonableness, or completeness of any of the statements made during this presentation, including, but not limited to, statements obtained from third parties. Opinions, estimates and projections constitute the current judgment of the speaker as of the date indicated. They do not necessarily reflect the views and opinions of Apollo and are subject to change at any time without notice. Apollo does not have any responsibility to update this presentation to account for such changes. There can be no assurance that any trends discussed during this presentation will continue.   

Statements made throughout this presentation are not intended to provide, and should not be relied upon for, accounting, legal or tax advice and do not constitute an investment recommendation or investment advice. Investors should make an independent investigation of the information discussed during this presentation, including consulting their tax, legal, accounting or other advisors about such information. Apollo does not act for you and is not responsible for providing you with the protections afforded to its clients. This presentation does not constitute an offer to sell, or the solicitation of an offer to buy, any security, product or service, including interest in any investment product or fund or account managed or advised by Apollo. 

Certain statements made throughout this presentation may be “forward-looking” in nature. Due to various risks and uncertainties, actual events or results may differ materially from those reflected or contemplated in such forward-looking information. As such, undue reliance should not be placed on such statements. Forward-looking statements may be identified by the use of terminology including, but not limited to, “may”, “will”, “should”, “expect”, “anticipate”, “target”, “project”, “estimate”, “intend”, “continue” or “believe” or the negatives thereof or other variations thereon or comparable terminology.