Fitch Flags Major Credit Risks Amid Sticky Inflation and High Interest Rates: Bond Market Turmoil Persists
Portfolio Pulse from Piero Cingari
Fitch Ratings has highlighted major credit risks due to persistently high inflation and interest rates. The agency's report points to vulnerabilities in the commercial real estate sector and challenges to China's recovery. Fitch predicts a shallow recession in the US, limited growth in the eurozone, and risks to China's recovery. The bond market continues to face volatility, with ETFs tracking longer-term Treasury bonds and corporate bonds issued by US companies experiencing challenges.
August 17, 2023 | 4:19 pm
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American International Group Inc. (NYSE:AIG) 4.7% bonds maturing in 2035 declined by 3.6%.
The company's bonds are experiencing a decline due to the ongoing volatility in the bond market, which is being impacted by high inflation and interest rates.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
Elevance Health Inc. (NYSE:ELV) 4.65% bonds maturing in 2044 fell 4.7%.
The company's bonds are experiencing a decline due to the ongoing volatility in the bond market, which is being impacted by high inflation and interest rates.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
Bonds issued by Ely Lilly & Company (NYSE:LLY), experienced a 5.43% drop.
The company's bonds are experiencing a decline due to the ongoing volatility in the bond market, which is being impacted by high inflation and interest rates.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
The iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE:LQD) fell to the lowest since early November 2022.
The ETF is experiencing a decline due to the ongoing volatility in the bond market, which is being impacted by high inflation and interest rates.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
The iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) recorded a 0.6% decline, possibly setting the stage for revisiting lows witnessed in 2022.
The ETF is experiencing a decline due to the ongoing volatility in the bond market, which is being impacted by high inflation and interest rates.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80