Wall Street Dodging Bonds Lifts Risk in Tapering: Credit Markets
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Wall Street’s biggest banks are demonstrating an unwillingness to wager on corporate debt in times of stress, raising concern that any losses will be magnified when the Federal Reserve tapers its record stimulus.
As speculation mounted in the two weeks ended Oct. 9 that the U.S. could default on its debt, the 21 primary dealers that trade directly with the central bank sold a net $180 million of investment-grade notes, Fed data show. The flight was bigger four months ago as the market spiraled into its worst performance since the financial crisis, with dealers slicing inventories by a net $4.77 billion.