Soaring Bankruptcies Bode Ill For US Stocks

Authored by Simon White, Bloomberg macro strategist,

US stocks are on increasingly unstable ground as credit spreads begin widening due to greater bankruptcy risk, rising yields and a steepening yield curve.

They say you can’t run away from your past. Likewise, markets can’t escape from their fundamentals indefinitely. For stocks, profits are key; for sovereign bonds it’s taxes; and for credit it’s default rates. Bankruptcy filings have been rising and are approaching their post-pandemic highs. That’s not good for credit or the stock market.