Deutsche Bank Asks if the Corporate Default Cycle Has Started
And answers not quite but we're getting close.
This article is for subscribers only.
Recipe for one corporate default cycle:
- Take a generous heaping of market volatility.
- Combine with contagion in investment-grade.
- Add a liberal dose of monetary policy tightening.
- Whip it all together; be careful not to get your fingers burnt.
With the corporate bond market falling out of bed in recent weeks, it's only natural that some analysts are questioning whether the selloff means we are entering the latter stages of the corporate credit cycle, i.e. a pickup in company defaults. The current credit cycle has arguably been extended thanks to years of low interest rates and easy money from the Federal Reserve, allowing companies to sell boatloads of bonds.