U.S. junk bond and corporate bond spreads rise due to market concerns and stock sell-off.
U.S. junk bond spreads and corporate bond spreads have increased due to financial market concerns over risks and a stock market sell-off. The ICE/BofA U.S. high yield index spread surged by 37 basis points to 372 bp, while the ICE/BofA U.S. Investment Grade Corporate Bond Index spread posted its largest jump since May. This comes after a recent employment report showed slower job growth than expected and an increase in the unemployment rate. Market participants suggest the spread widening is a correction rather than a precursor to a recession. Despite the increase in spreads, some analysts predict high-yield bond spreads could widen to 500 bp, while others expect corporate bond market activity to pick up once spreads stabilize.
August 05, 2024
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