Those concerns were joined, if not overtaken, by war. Prior to the announced ceasefire, most market reactions were in the predictable directions: stocks down, government yields and the dollar up, spreads wider, and oil (Brent c.+80%) and European gas (c.70%) showing the biggest moves.
Year four of the bond bull market started calmly, albeit with a range of ongoing concerns. AI investment was driving a surge in long-dated issuance amid nagging doubts about eventual revenue generation and potential negative economic impacts.
Meanwhile, a few credit “mishaps” begged the question: are these isolated incidents, or the leading edge of a full-blown credit cycle that could rip through private placement funds, BDCs [business development companies] and CLOs [collateralised loan obligations] — potentially even posing a systemic risk to the economic expansion?
