Fed's latest Financial Stability Report is out. It's always worth a read. Here are some things I found interesting:
federalreserve.gov
federalreserve.gov
Interest rates rose aggressively, but corporate can still easily cover their interest payments. Earnings are solid, and lots of fixed rate low interest debt.
Notably only 5% of BBB and 1% of high yield bonds are due within a year. The maturity wall is in the future.
Notably only 5% of BBB and 1% of high yield bonds are due within a year. The maturity wall is in the future.
Credit quality is fine too.
Delinquencies in auto and credit cards remain historically low, though normalizing.
Defaults on leveraged loans also remain historically low.
Delinquencies in auto and credit cards remain historically low, though normalizing.
Defaults on leveraged loans also remain historically low.
Also note that post-GFC banks are much less reliant on wholesale funding. That is a structural reason why bank funding costs and remain low even as Fed hikes rates.
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