Distress in the corporate bond market | 30 6月 2022

30 6月 2022, USD/JPY

USDJPY trading plan:

The spread on the BofA U.S. High Yield Index, a commonly used benchmark for the junk bond market, has climbed by more than 200 basis points since the beginning of the year, and reached a peak of 538 basis points this month, the highest since September 2020. Spreads - the premium investors demand to hold riskier debt over risk-free Treasuries - also have widened for investment grade corporate credit, though to a lesser extent. "Corporate bonds are a key source of funding for U.S. non-financial corporations and a key investment security for insurance companies, pension funds, and mutual funds," New York Fed researchers said in a blog. "Distress in the corporate bond market can thus both impair access to credit for corporate borrowers and reduce investment opportunities for key financial sub-sectors," they said. This is a bad signal for the stock market and USDJPY, which has a correlation with the shares.

Investment idea: sell 136.45 and take profit 135.80.

David Johnson
Analyst of «FreshForex» company
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