Insurance Companies Worry as U.S. Corporate Bond Returns Drop
Posted on 05/05/2022
U.S. corporate bonds are now falling as much as they did in the March 2020 COVID-19 crash; however not as abrupt. In 2020, the Federal Reserve stepped in to save the U.S. bond market from blunt COVID lockdown measures.
Some investors have started exiting the riskiest of the corporate bond sets in the U.S. Duration is not the only reason that high-rated U.S. corporate bonds are underperforming. The amount of debt trading at distressed levels remains low, but is expected to rise as the Federal Reserve pushed for a 50 basis point rate hike. U.S. spreads remain tight due to Treasury yields that are also rising.
U.S. insurance companies are major holders of U.S. corporate bonds.