Capital Market News: What happened? Investor Rush into US Corporate Bonds

The US corporate bond market has been overwhelmed with flood of investor capital recently (March 2024) marked by high expectations of interest rate cuts from the Federal Reserve. With yields hitting their highest levels in years, the rush into corporate bonds has changed the way the market works, making buyers both hopeful and worried. Most assets are in investment-grade bonds, but even junk debt has seen a rise, and spreads are now close to what they were before the financial crisis.

The Federal Reserve’s decision to keep interest rates at a 22-year high and its prediction that rates will be lowered by three quarter points this year have made investors more optimistic. Still, there are worries about the US economy’s health and what might happen if the expected rate cuts don’t happen, like companies going bankrupt or more people not paying their debts. Due to the unstable market over the past two years, buyers have been extra cautious or pulled their money out of bond funds, making it harder for businesses to get the money they need. Thanks to the high yields on US investment-grade debt, capital has come from all over the world and from different types of domestic and foreign sources.

Do you think this news will affects Indonesia Capital Market?

Source: the financial times

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