If we're on the brink of a deepening default cycle, U.S. corporate debt hasn't gotten the message. Investors are demanding the least extra yield over rates to own the lowest-rated junk bonds since February, before the pandemic really took hold. pic.twitter.com/KQNWLW6NPm
— Lisa Abramowicz (@lisaabramowicz1) October 21, 2020
No deflation with rising permanent joblessness spells STAGFLATION. Just sayin… t.co/q71USOug43
— Danielle DiMartino Booth (@DiMartinoBooth) October 21, 2020
Turns out the federal government’s plan for dealing with a mega bank failure on Wall Street is no better conceived than the federal government’s plan for dealing with the worst pandemic since 1918.
investors need to remember that speculative-grade companies aren’t immune from going bust, no matter how wide open the debt markets might be. Junk-rated bonds, backed by a business that can’t make it through the pandemic, are just junk.