Bonds Are Sniffing Out We Have Our Next Leg Up Higher In Inflation… BoA: 5% Inflation Could Cause 15% of Junk Bonds to Default

by
Sharing is Caring!

TLT is cracking lows not seen since 2011.

5% Inflation could cause 15% of Junk Bonds to default. – Bank of America via Bloomberg

“That wave could bring cumulative high-yield defaults to 15%, according to Melentyev, a jump from current levels. In the last 12 months, about 2.5% of US high-yield debt defaulted, according to Fitch Ratings. A persistent 4% inflation rate could bring cumulative defaults to 10%, Melentyev wrote.”

See also  Latest state data show price levels in California are 12.6% higher than the national average

Hedge funds are boosting bets against U.S. stocks as selloff continues, Goldman Sachs says

“Hedge funds have been ramping up bets against U.S. stocks amid the worst streak of losses for the S&P 500 since the collapse of Silicon Valley Bank, according to data from Goldman Sachs Group’s prime brokerage unit.

Goldman’s hedge fund clients increased short positions in single stocks, exchange-traded funds and equity index products through Friday for the third straight week, according to research shared by the bank with its clients.

See also  The combination of the Fed's rate cuts and a drop in RRP usage could set the stage for liquidity strains, potentially leading to another repo crisis similar to what happened in 2019.

Hedge funds have now increased their short positions during five of the last six weeks, with the bulk of the action occurring in single-name stocks. Shorting a stock involves borrowing the shares from a broker, like Goldman, and selling them, hoping to eventually buy them back and close the position at a lower price.”

h/t GlassHouse_101