News | 12.04.18
Investors Worry Liquidity Crisis Looms on Fixed-Income Horizon
As volatility has surged, first in the stock market and now in credit markets, liquidity is starting to dry up across segments of the corporate bond markets. Analysts warn the widening of spreads in the high-yield bond market could be a sign of trouble to come. Central banks are now tightening monetary policies, and spreads are widening across corporate bond markets. A severe liquidity crisis like 2008, when whole swaths of the credit markets shut down, may be unlikely, but there is concern that the post-financial crisis bond market could be vulnerable in a period of sustained volatility.
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