There is further room for a tightening in credit risk premiums on investment grade bonds, indicating that the phenomenal rally that has swept up the credit markets since March is set to continue, US investment bank Goldman Sachs has predicted.

Credit strategists from Goldman Sachs said in a report today that while most of the "normalisation in risk appetite is probably behind us", they nonetheless expect macroeconomic performance should be "good enough" to support a stable appetite for credit risk. They attributed this to the combined effects of fiscal stimulus and the inventory rebuild by investors.