Equity Contagion Spreads to Credit, Deepening Worries on Growth
- Oil prices, GE woes, growth concerns are weighing on bonds
- Spreads probably haven’t widened enough to impact Fed: Goldman
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For all the angst about corrections and bear markets in equities around the world, it’s credit that’s historically been the asset class that delivers the ultimate warning of impending economic trouble. The bad news: debt stress is starting to pile up.
As with the stock slump in late January, premiums on investment-grade corporate bonds compared with government debt have jumped the world over in recent weeks. Whether it’s U.S. or European or Asian-dollar spreads, they’re now at the highest since 2016 -- back when investors still worried about deflation, and stress levels were high enough that the Federal Reserve hit the pause button on monetary tightening for a year.