Corporate Credit Defaults in the US
Corporate credit defaults in the US rose after President Trump threatened to increase tariffs on Canada, causing concerns in the derivatives markets. Despite the volatility, credit markets are still relatively stable due to high corporate cash balances and strong investor demand for new bonds.
Key Points
- President Trump's tariff threats on Canada led to increased concerns in the derivatives markets
- Credit default swaps on retailers and airlines rose, reflecting growing investor concern
- Credit markets remained relatively stable due to high corporate cash balances
Pros
- Corporate cash balances are high
- Investor demand for new bonds remains strong
Cons
- Uncertainty around tariffs causing investor angst
- Widening spreads on credit default swaps for retailers and airlines