Recession Fears Overtake Rate Worries in Global Credit Markets

A silent yet seismic shift is rocking global credit markets.

Corporate bond prices crashed dramatically last week. The US investment grade market fell to a painful mid-teen percentage loss for the year. Junk bonds crossed into double-digit loss territory. So far, so 2022.

But dig beneath the carnage, and bond prices are also flashing a warning of something intensely more worrying than poor portfolio returns: the swelling probability of slowing economic growth and a looming recession.

Credit investors have hit an inflection point: Their focus has shifted away from warding off the hit of higher interest rates to guarding against ...