US junk bond issue hits record as GDP slows

Consumer demand, Economic growth, Financial Events, Leverage

Junk bonds.pngAs noted by a blog reader last week, retail investors are throwing caution to the winds.

Unwilling, or unable, to adjust their lifestyles to cope with lower interest rates on government bonds, they have rushed to instead buy higher-yielding ‘junk bonds’.

These are less than normal ‘investment’ grade, and offer increased yield in exchange for higher risk of default.

Clearly, however, investors are focused on the yield, not the risk. The Wall Street Journal notes:

• Junk bond sales to date are up 80% versus 2009, at $155bn
• This week saw $15.4bn sold, an all-time record

Meanwhile, overall US economic conditions continue to disappoint. The latest trade figures prompted many economists to reduce Q2 GDP estimates still further. First estimated at only 2.4%, very low for the middle of a supposed recovery period, some are now suggesting it could have fallen below 2%.

GDP in export-led countries such as China and Germany has soared in H1. But this growth will be cut short in H2, if the US economy is indeed sliding back towards recession. After 2009’s downturn, the US’s share of global GDP has risen to 25%, according to latest World Bank figures.

Junk bond investors may be partying for the moment. But when even the Chairman of the US Federal Reserve describes the outlook as being “unusually uncertain“, the blog maintains its preference for strategies that prioritise return of capital versus return on capital.


Global power shift to the East a "half-truth"


An interesting opinion piece in today’s China Daily suggests the concept t...

Learn more

The Drawn-Out Downtrend phase of the Crisis begins


“Humankind cannot bear very much reality” TS Eliot, 4 Quartets, 1936...

Learn more
More posts
No Deal Brexit still a likely option if opposition parties fail to support a new referendum

Canada’s normally pro-UK ‘Globe and Mail’ summed up the prevailing external view of Brexit las...

China’s renminbi and the global ring of fire

China’s property bubble puts it at the epicentre of the ring of fire © Reuters  China’s de...

Smartphone sales continue their decline, whilst $25 smart feature phones open up new markets

Global smartphone sales have now been falling for 8 consecutive quarters, since Q3 2017. They are no...

UK, EU27 and EEA businesses need to start planning for a No Deal Brexit on 31 October

New UK premier, Boris Johnson, said last week that the UK must leave the EU by 31 October, “do or ...

London house prices edge closer to a tumble

After the excitement of Wimbledon tennis and a cricket World Cup final, Londoners were back to their...

G7 births hit new record low, below Depression level in 1933

If a country doesn’t have any babies, then in time it won’t have an economy. But that...

From subprime to stimulus…and now social division

The blog has now been running for 12 years since the first post was written from Thailand at the end...

Resilience amidst headwinds is key for H2

Resilience is set to become the key issue as we look forward to H2, as I note in a new analysis for ...


Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more


Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more