Credit faces worst year since 2008 as strains intensify

Financial Times/Adam Samson and Robin Wigglesworth/11-30-2018

“Investors pulled more than $5bn from funds investing in corporate bonds in the past week, as the credit market heads for its worst year since the financial crisis a decade ago and concerns mount over the outlook for 2019. Rising US interest rates, the Federal Reserve shrinking its balance sheet and the European Central Bank ending its own bond-buying programme have stirred worries over a new era of “quantitative tightening” that could rattle financial markets.”

Fed voices fears about retirement investor core bond holdings
CNBC/Eric Rosenbaum/12-3-2018

“Fears about credit quality in the investment-grade bond market have been mounting for months. This week the Federal Reserve added its voice to the ranks of the concerned. In its first-ever Financial Stability Report and, later in the week, in the notes from its most recent Federal Open Market Committee meeting, the Fed cited conditions in corporate bonds as among the major risks for the U.S. economy and markets. And the Fed expressed more concern about investment-grade than high-yield, or junk, bonds.”

USAGOLD note:  Late yesterday we received word that yields on the 3-year and 5-year Treasury notes inverted putting further pressure on the already strained bond market.  The problem in the corporate debt sector is something we have monitored on this page for the past few months because of the concerns raised by regulators and Wall Streeters alike.

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