Corporate Bond Investors Face Uncertainty Amid Trade War
Pressure on corporate bond spreads is likely to persist as investors grow cautious of the domestic economic outlook and await the implications of the global trade war, which has already led to the widest spreads since October 2024. High-yield bond spreads hit a peak of 299 basis points, their widest since October 2024, while investment-grade spreads also widened this week to an almost five-month wide. The widening of corporate spreads reflects investors' concerns about the negative economic consequences of an ongoing or even intensifying trade war.
- The growing uncertainty around global trade policies may lead to a decline in investor confidence, potentially disrupting the normal functioning of financial markets.
- What would be the impact on the US economy if the trade tensions escalate further, and how would this affect corporate bond investors' risk appetite?