{"id":24564,"date":"2017-08-03T19:03:44","date_gmt":"2017-08-04T00:03:44","guid":{"rendered":"http:\/\/olduvai.ca\/?p=24564"},"modified":"2017-08-03T19:03:44","modified_gmt":"2017-08-04T00:03:44","slug":"credit-investors-are-suddenly-extremely-worried-about-central-banks","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=24564","title":{"rendered":"Credit Investors Are Suddenly Extremely Worried About Central Banks"},"content":{"rendered":"

Credit Investors Are Suddenly Extremely Worried About Central Banks<\/a><\/h3>\n
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On one hand, credit investors have never had it better with IG credit spread at record tights and junk bond yields sliding to 3 year lows<\/p>\n

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On the other, and this is linked to the above, they have never been more nervous, and as the latest Bank of America credit investor survey shows, more worried about the Fed in general, and “Quantitative Failure” in particular. <\/strong><\/p>\n

But why, if as so many claim, the Fed has nothing to do with the the return of risk assets? Ignore that, it’s rhetorical.<\/p>\n

As BofA’s Barnaby Martin writes, August\u2019s survey shows a marked change in the Wall of Worry, in which “Quantitative Failure” has now emerged as investors\u2019 top concern (23%), up materially from June\u2019s reading (6%). The reason for the sudden spike in central bank fears is that Investors say that a backdrop of the ECB ending QE next year, while inflation remains sub-par, has the potential to rattle the market\u2019s confidence.<\/p>\n

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The sudden fear about “QF<\/strong><\/em>“, or major policy error, means that the recent biggest worry, \u201cBubbles in credit\u201d has been downgraded to second biggest concern (down from 33% to 21%) while those worrying about \u201cyields rising\u201d increases slightly (from 12% to 14%).<\/div>\n<\/div>\n

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The chart above shows that at the top of the Wall of Worry for both high grade and high yield investors are:<\/p>\n