Bill Dudley yeni yazı

https://www.bloomberg.com/amp/opinion/articles/2019-11-20/two-risks-to-financial-stability-build-amid-short-term-calm?__twitter_impression=true

But the low bond term premia are unlikely to persist much longer. The Fed’s actions have reduced the risk of recession and increased the risk of higher inflation. Yet this has barely been priced into bond market valuations. 

The second long-term risk is the buildup of corporate debt — especially in the BBB rated and high-yield areas. In recent years, U.S. corporations have taken advantage of low interest rates and narrow corporate credit spreads to increase their leverage and move down the credit-quality curve. For many chief executive officers, the calculus has been simple — more leverage facilitates greater share buybacks. That shrinks the number of shares outstanding, boosting earnings per share and the company’s stock price. 

But the story isn’t likely to end there. Forced selling will generate significant congestion within the corporate debt market. After all, many investors with mandates that restrict holdings to investment-grade debt will have to unload their newly junk-rated bonds. This selling will push securities prices below their underlying value. Prices will have to become overly cheap to provoke opportunistic buying.