Credit Strength Is Baffling Fed Watchers Ahead of Rate Decision
- High-grade and high-yield spreads remain below 20-year average
- Strength raises question of policy lags or need for more hikes
Jerome Powell
Photographer: Sarah Silbiger/BloombergThis article is for subscribers only.
To have a shot at taming inflation, the Federal Reserve is intent on tightening financial conditions across the economy. But they haven’t made much of a dent in corporate America yet.
The extra yield investors demand for risk in the US investment-grade and high-yield bond markets has remained below their 20-year averages and well under levels seen during historical times of stress in the economy. Borrowing remains robust, one measure of credit quality is improving at a record rate and recent earnings reports for some of the nation’s most indebted companies have come in stronger than expected.