Yield-Hungry Investors Flood Credit Markets Ahead of Expected Fed Cuts
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Investors are pouring money into credit markets like junk bonds and investment-grade funds, reaching for yield ahead of expected Fed interest rate cuts.
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Inflows have pushed credit spreads to very tight levels, with investors betting yields could narrow further if more cash rotates out of money market funds.
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The biggest risk currently is the Fed not cutting rates as much as expected or even walking back plans for cuts.
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Demand is strong even for riskier debt like junior bank bonds from peripheral Eurozone countries paying 8%+ yields.
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Distressed corporate debt levels have dropped over 7% globally since early January as struggling companies benefit from the broad rally.