LQDB - Where The Looming Credit Maturity Wall And The Economy Collide
2024-03-16 04:55:00 ET
Summary
- In early 2024, investors' eyes remain intently focused on the Federal Reserve's policy path, as decelerating inflation should open the door to Fed rate cuts this year - a pivotal event for financial markets.
- A much-flagged risk for this year is that, due to the Fed’s 2022-23 hiking cycle, the wall of maturing debt will face significantly higher refinancing costs, potentially triggering a spike in defaults.
- Corporations have not been materially impacted by the Fed's tightening cycle until now, as pandemic response actions essentially insulated them from the effects of rising policy rates.
By Seema Shah, Chief Global Strategist
In early 2024, investors' eyes remain intently focused on the Federal Reserve's policy path, as decelerating inflation should open the door to Fed rate cuts this year - a pivotal event for financial markets. Historically, risk assets have thrived during rate-cutting cycles if recession is avoided. This year, however, with the "maturity wall" looming, investors may not be as indiscriminate in their support of markets....
Where The Looming Credit Maturity Wall And The Economy Collide