This must be more of those signs of the “strong economy” everyone keeps talking about.
Junk debt often leads equities as they are one step above equities in their claim on companies. Weakness in junk will appear first.
Interesting comments:
“The business at Citigroup outperformed in 2021 and slowed significantly in the two years after that, two of the people said.”
So it topped out along with the 2021 stock top and dropped during the last 2 years of bear market. But if this is a new bull market, it should be surging again, instead it’s been cut completely 🤔 this is supposed to be a strong economy?
“Bank of America Corp. (BAC) and Goldman Sachs Group Inc. (GS) are among the other participants in the market known for their distressed franchises, a field that’s dwindled to only a few big sell-side players globally, the people said. “
– it’s dwindled to only big sellers. Where is all the buy side demand? Strong economy, would mean lots of investors pouring money in to corporate bonds. Why are there no buyers in such a “strong economy”
Big red flag here. Liquidity fleeing from corporate debt but then a lesser claim against assets (stocks) are getting ready to soar? Then why is the underlying claims against those same companies so lacking in demand. To the point where a bank stops selling them all together…
by Wealthprophet
2 comments
Given the yield on treasury bonds right now, Im not sure its worth seeking yield from riskier corporate debt.
Disturbing trend given the recent tripling of zombie companies that soley live on inexpensive financing while actually loosing money. These are 18 percent of public companies. Nobody knows who is swimming naked until the tide rolls out.