Credit Rally Defies Rotten Fundamentals After Central Bank Buys
- Gap between markets and economic data never larger, Citi says
- Fed can help with liquidity but not bigger solvency issues
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Credit markets have rallied strongly this month, despite an economic slump which slashes earnings even as companies take on more debt. Central banks saying they’d buy corporate bonds helped crush credit spreads, but they can’t resolve fundamental underlying issues.
“The gap between markets and economic data has never been larger,” Matt King, global head of credit strategy at Citigroup Inc., wrote in a note Wednesday.