- 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.
Bonds in Trouble as $1 Trillion Liquidity Drains: Credit Weekly
Add central banks to the wall of worry for global credit markets.
James Crombie
