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Bond is spreading falling as investors rush into corporate loans


The rise in corporate debt and the US economy has slowed down for more than a decade, indicating that investors believe that the recent economic downturn will not hamper economic recovery.

The growth gap between yields – known as spreads – means that consumers are demanding less money than before with corporate debt, which is more risky than the US Securities.

The gap between the US Treasury and the corporate bond has grown significantly this year, as investors have become more confident and confident to have the smallest economy in the world.

This pressure, which reflects the higher risk of lending to companies compared to the US government, was compelled by a sharp rise in prices from mid-April to May.

However, more and more people are coming to the Fed’s mantra that inflation will ensure temporary as the economy recovers after the epidemic, pushing for lower prices.

“Investments have been a major factor in the growth of the industry, which has given confidence to corporate investors,” said Adrian Miller, chief marketing officer at Concise Capital Management. “Other than that, those who sell corporations to companies are more focused on the process of rapid growth.”

Confidence in the economic recovery was reaffirmed on Wednesday as Fed officials have signed end-of-life change in post-traumatic stress disorder, and optimism for the return of America. The hawkish rhetoric from the Fed’s chairman Jay Powell – combined with comments that “price stability is half our work” in the Fed – has helped alleviate concerns that inflation could be undermined, forcing an emergency response from the central bank.

The spread between US Treasury yields and trading institutions fell 0.02% to 0.87% on Wednesday, according to ICE BofA Indices, the lowest since 2007, and unchanged on Thursday. On a small scale – and why it is so dangerous – high yields, the spread fell 0.05 percent to 3.12 percent, below low after the last crisis set in October 2018. It grew modestly to 3.15% on Thursday.

The spread of the virus has been fueled by the central bank’s response to the epidemic and the multi-billion dollar government-sponsored package. The economic situation in the US is close to the easiest to record, according to a well-known Goldman Sachs report, which has encouraged corporate and risky corporate lending.

A small number of non-cash-strapped 373 companies have borrowed through the stock market of about US $ 11tn so far this year, including companies most affected by the epidemic. American Airlines and a sailor Celebrations. Together with the risk group raised $ 277bn, the recorded speed is up 60% from last year’s levels, according to data provider Refinitiv.

Annual income chart from the largest US stock market ($ bn) showing US companies with a debt problem is slowly lending

Yet the collapse of the spread and the economic outlook on risk were not enough to keep up with the overall rise in yields, which have been sharply raised in anticipation of a rise in interest rates as investors quickly change the direction of the Fed.

The most legitimate loan, which is safe but provides a small spread for investors to avoid the Treasure stock, suffers the most from high-growth, high interest rates. Institutions that provide higher yields also benefit, because the ever-increasing economy keeps companies afloat.

Andrzej Skiba, US debt manager at BlueBay Asset Management, said, “At the moment people are not afraid of the high cost of production.” “The companies are doing very well and we see that the money is going well.”

Investment savings groups have moved 0.3 per cent to 2.08 per cent since the start of the year, compared with a decrease of 0.27 per cent to 3.97 per cent on higher yields.

Bank of America analysts expect the two markets to remain close together, showing that the spread of inflation is growing at 1.25% and the distribution of higher yields will continue to decline to 3.00% in the coming months.

However, even the prospect of recovery in the US, the growing number of low-income corporations has raised concerns in some areas. Advertisers are concerned that unscrupulous companies are being given loans at interest rates that are not at high risk.

“It is very important for us that the yields we receive on high yields give a fair return on investment risks. When yields are so low, it is naturally difficult to say, “says Rhys Davies, Invesco’s high yield manager.


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