Recession Fears Overtake Rate Worries in Global Credit Markets

After getting pummeled by rates, global credit markets are increasingly stressed about recession risk.

Corporate bond prices extended losses last week, with US junk bonds crossing into double-digit decline territory for the year. 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 companies with poor performance that could ...