{"id":47422,"date":"2019-07-26T09:45:03","date_gmt":"2019-07-26T14:45:03","guid":{"rendered":"https:\/\/olduvai.ca\/?p=47422"},"modified":"2019-07-26T09:52:09","modified_gmt":"2019-07-26T14:52:09","slug":"yellow-light-is-the-credit-market-finally-reversing","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=47422","title":{"rendered":"“Yellow Light” – Is The Credit Market Finally Reversing"},"content":{"rendered":"\n

“Yellow Light” – Is The Credit Market Finally Reversing<\/a><\/h3>\n\n\n\n

Keep digging<\/strong><\/p>\n\n\n\n

Yesterday, the European Central Bank held a stand-pat meeting,<\/strong> keeping the benchmark deposit rate at negative 40 basis points.<\/p>\n\n\n\n

However, ECB president Mario Draghi indicated that rate cuts and a resumption of asset purchases are on tap for September.<\/strong>  In the accompanying presser, the outgoing ECB chief captured the mood of central bank-levitated markets, stating that: \u201cit\u2019s difficult to be too gloomy today,\u201d while the outlook \u201cis getting worse and worse.\u201d The German 10-year yield traded as low as negative 42 basis points, briefly crossing below the 40 basis point deposit rate. <\/p>\n\n\n\n

\"\"\/<\/figure>\n\n\n\n

While sovereign debt holders continue to rack up mark-to-market gains, not everyone is enamored with the prospect of still-more negative interest rates.<\/p>\n\n\n\n

\u201cWe already have a devastating interest rate situation today, the end of which is unforeseeable,\u201d <\/strong>Peter Schneider, who represents banks in the south-eastern German state of Baden-W\u00fcrttemburg, told Bloomberg yesterday.<\/p>

\u201cIf the ECB aggravates this course, that would hit not only the entire financial sector hard, but especially savers.\u201d<\/strong><\/p><\/blockquote>\n\n\n\n

Meanwhile, policymakers down under attempt to quantify the practical limits of negative policy rates.<\/strong> In a paper written to New Zealand finance minister Grant Robertson in January and recently released to the public, staffers in the Treasury Department concluded:<\/p>\n\n\n\n

\u201cThe Reserve Bank expect rates could only fall at most 35 basis points below zero before risking the hoarding of physical cash.\u201d<\/p><\/blockquote>\n\n\n\n

Today, the global stock of negative-yielding debt rose to $13.74 trillion, a new record.<\/strong><\/p>\n\n\n\n

\"\"\/<\/figure>\n\n\n\n

Yellow light<\/strong><\/p>\n\n\n\n

As we close out month 121 of the longest economic expansion on record, let\u2019s take a look at the state of U.S. corporate credit.\u00a0\u00a0<\/strong>Year to date, investment-grade bonds have generated a whopping 12.3% total return, while high-yield has returned 10.6%. Leveraged loans have lagged far behind, with the LSTA Index gaining just 3.3% so far this year.<\/p>\n\n\n\n

 \u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"

“Yellow Light” – Is The Credit Market Finally Reversing Keep digging Yesterday, the European Central Bank held a stand-pat meeting, keeping the benchmark deposit rate at negative 40 basis points. However, ECB president Mario Draghi indicated that rate cuts and a resumption of asset purchases are on tap for September.  In the accompanying presser, the outgoing […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[5869,233,20165,9300,1044,26357,741],"class_list":["post-47422","post","type-post","status-publish","format-standard","hentry","category-economics","tag-credit-market","tag-ecb","tag-grants-interest-rate-observer","tag-james-grant","tag-mario-draghi","tag-negative-policy-rates","tag-sovereign-debt"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/47422","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=47422"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/47422\/revisions"}],"predecessor-version":[{"id":47424,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/47422\/revisions\/47424"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=47422"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=47422"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=47422"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}