Cracks are beginning to form in the credit markets. Riskier, high yield debt is stumbling as inflation fears rise. Tech valuations are at an all-time high and volatility is increasing.
Investors fear that the recent decline in high flying tech stocks will spread to corporate debt. Investors have bid up low-rated credit default swaps from $123 billion in December to $197 billion in January as an anticipation that companies will begin defaulting on their debt as interest rates increase.
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