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Yahoo
5 days ago
- Business
- Yahoo
Corporate Credit Markets Are Flashing Signs of Complacency, UBS Says
(Bloomberg) -- Corporate credit markets in the US are exhibiting greater signs of complacency than the stock market by one key measure, as debt valuations approach multidecade highs, according to UBS. PATH Train Service Resumes After Fire at Jersey City Station Mayor Asked to Explain $1.4 Billion of Wasted Johannesburg Funds Chicago Curbs Hiring, Travel to Tackle $1 Billion Budget Hole Seeking Relief From Heat and Smog, Cities Follow the Wind Invest in Gold American Hartford Gold: #1 Precious Metals Dealer in the Nation Priority Gold: Up to $15k in Free Silver + Zero Account Fees on Qualifying Purchase Thor Metals Group: Best Overall Gold IRA Risk premiums in the US high-yield market — which measure the extra yield investors demand to hold that debt instead of Treasuries — are hovering less than half a percentage point above their 10-year low. By the bank's calculations, investors in those bonds are suggesting global economic growth of more than 5% this year, which is higher than what most other markets imply, UBS strategists, including Matthew Mish, wrote Monday. The bank is forecasting the global economy will grow 2.7% in 2025, while the stock market is implying growth of 4.5%. Foreign exchange, rates and commodities markets all suggest less growth than US high-yield. 'Credit complacency is a dominant theme across our investor meetings,' Mish wrote, referring to US and European markets. 'Both markets display a mix of optimism and underlying risks that could lead to potential vulnerabilities, but the US looks more complacent.' The growth measure is the latest sign that credit markets — which have boasted ultra-high valuations for much of this year — are failing to price in the risks of a downturn. Just last week, investment-grade spreads hit their narrowest levels since December before climbing the most since early April on the heels of a weak payrolls report and new tariff rates. While US credit markets have historically proven resilient to labor market hiccups, more recent examples show spreads can widen by as much as 20 basis points in high grade and 75 basis points in high yield, according to Mish. Add elevated inflation and risk premiums could jump by even more, he said. At the same time he noted, credit fund managers are overseeing portfolios with higher-than-average 'beta,' suggesting some may be adding risk in search of excess returns, which have been below average so far this year. AI Flight Pricing Can Push Travelers to the Limit of Their Ability to Pay Russia's Secret War and the Plot to Kill a German CEO Government Steps Up Campaign Against Business School Diversity What Happens to AI Startups When Their Founders Jump Ship for Big Tech How Podcast-Obsessed Tech Investors Made a New Media Industry ©2025 Bloomberg L.P.
Bloomberg
6 days ago
- Business
- Bloomberg
Corporate Credit Markets Are Flashing Signs of Complacency, UBS Says
Corporate credit markets in the US are exhibiting greater signs of complacency than the stock market by one key measure, as debt valuations approach multidecade highs, according to UBS. Risk premiums in the US high-yield market — which measure the extra yield investors demand to hold that debt instead of Treasuries — are hovering less than half a percentage point above their 10-year low. By the bank's calculations, investors in those bonds are suggesting global economic growth of more than 5% this year, which is higher than what most other markets imply, UBS strategists, including Matthew Mish, wrote Monday.
Bloomberg
07-05-2025
- Business
- Bloomberg
UBS Cuts Bond, Loan Sale Outlook by $235 Billion on Trade Tumult
UBS Group AG lowered its forecast for US corporate debt issuance this year, citing volatility tied to President Donald Trump's tariff rollout and a slower-than-expected pace of dealmaking. The bank's research arm cut its estimate for blue-chip debt sales by $100 billion to $1.4 trillion, strategists led by Matthew Mish wrote in a report. It now sees $250 billion of junk-bond issuance, down from $310 billion prior, and $400 billion in leveraged loan sales, versus $475 billion previously.
