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The JPM Credit Strategy team published their strategy into year-end and a few themes stand out
1. The hunt for yield continues and corporate credit is a primary beneficiary
2. The Fed has reduced vol despite having low $ participation in credit markets
3. Demand remains strong, as illustrated in fund flows and purchases of new issuance
4. Companies have built cash reserves in preparation of a COVID second wave.
5. Credit downgrades have slowed.
6. Valuations are not great unless you increase your duration (maturity).
7. The sensitivity to treasuries is at an all-time high.
8. Leverage is at new highs with more debt and lower EBITDA. Given the cash builds in mentioned earlier, it is unclear if that goes to reduce debt or toward M&A.