Fed Hikes, Warsh's Credibility, Credit Concerns | Real Yield 9/17/2026

Watch on YouTube ↗ | September 17, 2026 at 19:50 | 29:26 | Bloomberg Markets

Speakers

Rebecca Venter — Senior Fixed Income Client Portfolio Manager, Vanguard

Ed Al-Hussainy — Portfolio Manager, Total Return Bond

Ken Shinoda — Portfolio Manager, Doubleline Capital

Michael Best — Head of Crypto, ARK Invest

St. John — Senior Portfolio Manager, Lincoln Investment

Aashna Shah — Muni Reporter, Bloomberg

Michael McKee — International Economics & Policy Correspondent, Bloomberg

Scarlet Fu — Anchor, Bloomberg Television

Shruti Singh — Muni Bond Reporter, Bloomberg

Summary

Bloomberg Real Yield covers the Fed's first 25-basis-point rate hike in more than three years and the market's read on Fed credibility. Fixed income guests discuss higher starting yields, curve positioning, and the case for front-end and intermediate duration. A credit roundtable debates high-yield quality, CCC and software credit stress, leveraged loan maturity walls, junior capital, and AI infrastructure credit. Later segments cover municipal bond cheapness, data center pushback, and Japanese investor repatriation flows.

Fed hikes 25 bps and signals more tightening; market sees high odds of future hikes.
Fixed income managers see cushion in higher yields and favor intermediate duration, with front-end for yield and long end for protection.
Credit panel says high-yield bonds are high quality but CCC and weak software credits face refinancing stress.
Leveraged loans face a 2028 maturity wall and lower-rated/software loans show high dispersion.
Junior capital and high-yield are framed as better capital solutions than private credit for overlevered companies.
AI/digital infrastructure credit spreads are tight and vulnerable to hyperscaler capex pullback.
Munis are near cheapest levels versus Treasuries; muni-Treasury ratio at 75%.
BOJ rate hikes may spur Japanese repatriation and selling of U.S. Treasuries.

Ideas

Rebecca Venter Senior Fixed Income Client Portfolio Manager, Vanguard 6:47

Fixed income offers cushion at high yields.

Higher starting yields and the market's prior pricing of Fed tightening give fixed income investors a cushion; even if rates rise a bit more, the Bloomberg U.S. Aggregate is attractive for long-term allocations.

Ed Al-Hussainy Portfolio Manager, Total Return Bond 7:16

Front end for yield, long end protection.

With the curve flattened, front-end Treasuries offer pure yield for conservative investors, while stepping out on the curve provides protection against equity and credit drawdowns; tightening at the front end may also help 10- and 30-year yields find a ceiling, though the ultimate high in yields is uncertain.

Rebecca Venter Senior Fixed Income Client Portfolio Manager, Vanguard 7:49

Intermediate duration offers paid protection.

Intermediate-duration fixed income works well for long-term investors because the curve pays about 100 basis points over money-market yields to the 10-year and provides protection in the portfolio.

Ken Shinoda Portfolio Manager, Doubleline Capital 9:35

IG fine, riskier credit shows cracks.

Investment-grade credit spreads at sub-80 look fine, but cracks are appearing in riskier parts of the market, especially bank loans, private credit, and software exposure.

Ken Shinoda Portfolio Manager, Doubleline Capital 9:35

IG fine, riskier credit shows cracks.

Investment-grade credit spreads at sub-80 look fine, but cracks are appearing in riskier parts of the market, especially bank loans, private credit, and software exposure.

Michael Best Head of Crypto, ARK Invest 10:43

CCC and software credits face distress.

Most high-yield borrowers can withstand marginally higher interest costs, but CCC-rated and riskier software credits face material refinancing headwinds that could push some into distress, bankruptcy, or liability management.

Michael Best Head of Crypto, ARK Invest 12:24

High-yield bonds are high quality.

The high-yield bond market has never been higher quality, with CCCs at low levels and BBs high, so default rates are unlikely to rise materially even with higher rates.

Michael Best Head of Crypto, ARK Invest 12:41

Leveraged loans face maturity wall.

The leveraged loan market faces a 2028 maturity wall; struggling borrowers will likely need distressed exchanges or bankruptcies, and U.S. loan default rates are expected to pick up.

St. John Senior Portfolio Manager, Lincoln Investment 13:58

Lower-rated software loans face refinancing stress.

Credit dispersion is near an all-time high and further rate hikes would worsen it; lower-rated, higher-leverage borrowers, especially in software, will struggle to extend maturities and pay more to do so.

Michael Best Head of Crypto, ARK Invest 17:30

Junior capital attractive for overlevered companies.

Bespoke/private-credit solutions are likely marginal because of existing software exposure, making junior capital an attractive way to provide capital to overlevered but not fundamentally broken companies that need pressure released.

St. John Senior Portfolio Manager, Lincoln Investment 20:25

AI infrastructure credit vulnerable to capex pullback.

The digital infrastructure buildout supporting AI is priced at very tight spreads in leveraged credit, so any pullback in hyperscaler capex that filters down to the market could be a spread-widening event.

Aashna Shah Muni Reporter, Bloomberg 22:03

Munis cheap versus Treasuries.

Municipal bonds are near their cheapest levels relative to Treasuries, with the muni-Treasury ratio at 75%—a gauge of buying opportunity—while heavy issuance and softening demand may be offset by nontraditional buyers.

Michael McKee International Economics & Policy Correspondent, Bloomberg 28:25

BOJ hikes may spur UST selling.

As the Bank of Japan raises rates, Japanese investors will bring cash home to buy domestic securities, likely selling U.S. Treasuries; this creates a flow headwind for USTs even if currency relative value remains near status quo.

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This Bloomberg Markets video, published September 17, 2026, features Rebecca Venter, Ed Al-Hussainy, Ken Shinoda, Michael Best, St. John, Aashna Shah, Michael McKee discussing AGG, SHY, TLT, BIV, LQD, BKLN, BIZD, IGV, Riskier software credits, XCCC, HYG, Leveraged Loans, Lower-rated leveraged loans, Software leveraged loans, Junior capital, AI/digital infrastructure leveraged credit, MUB. 13 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Rebecca Venter, Ed Al-Hussainy, Ken Shinoda, Michael Best, St. John, Aashna Shah, Michael McKee · Tickers: AGG, SHY, TLT, BIV, LQD, BKLN, BIZD, IGV, Riskier software credits, XCCC, HYG, Leveraged Loans, Lower-rated leveraged loans, Software leveraged loans, Junior capital, AI/digital infrastructure leveraged credit, MUB