There’s a New Recession Canary in the Coal Mine, Morgan Stanley Says

Move over bond spreads, there’s a new canary in the credit coal mine when it comes to showing the early signs of a looming recession.

So says Morgan Stanley strategist Srikanth Sankaran in a new note. He points out that while junk-rated bonds have traditionally been the credit market’s first to crack as economic conditions deteriorate, that position may now be filled by the more than $1 trillion worth of floating-rate loans.