- Central banks' $1 trillion liquidity injection may become a huge drag on credit markets.
- Corporate debt markets had the best Q1 since 2019, but may stall or go into reverse as central banks shift to a tighter policy stance.
- Junk bonds are most likely to suffer from this reversal after swiftly recouping losses caused by the recent banking crisis.
- Stubbornly high inflation will force central banks to keep tightening pressure on, hurting the weakest companies most.
- Economic slowdown means earnings will suffer, hastening credit downgrades, defaults and distress.
Bloomberg — Markets — Central Banks — Finance — Economy — Investment
Bonds in Trouble as $1 Trillion Liquidity Drains: Credit Weekly
Central banks' $1tn liquidity injection may become a huge drag on corporate debt markets as policymakers get back to quashing inflation, warns Citigroup's global markets strategist Matt King.