JPMorgan and Barclays See Corporate Bonds Facing Pressure
- Credit outperformed equity last week, weakening just a bit
- Fed’s hiking, weakening fundamentals leave spreads vulnerable
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US corporate bonds outperformed stocks and other markets last week. Some Wall Street firms wonder how long that can last.
Risk premiums for high-grade US corporate notes widened just 0.01 percentage point last week, according to Bloomberg index data, even as stocks fell more than 4.7%. The Federal Reserve is likely to hike rates this week, and probably won’t hint at the possibility of slowing its tightening, which is one of the reasons there’s a “more cautious backdrop” for investment-grade notes this week, JPMorgan Chase & Co. strategists led by Eric Beinstein wrote on Monday.