U.S. companies now face the highest levels of debt on record — more than $10.5 trillion, according to the Federal Reserve and the Securities Industry and Financial Markets Association, or SIFMA.
The coronavirus pandemic is only part of the story.
The corporate debt market is where companies go to borrow cash. And for over a decade, super-low interest rates left over from the 2008 financial crisis have made borrowing easier and easier. Since then, U.S. companies have regularly offered up bonds for sale, taking advantage of the cheap access to cash.
Sometimes companies can get reckless with debt, and this can result in bonds facing downgrades and low ratings, putting those companies at junk bond status. Overborrowing can result in companies becoming “fallen angels” or “zombie” companies.
Between rising interest rates and inflation concerns, Wall Street is watching the bond market closely and checking the pulse of the U.S. economy.
Here’s how the corporate bond market got to these “bubble” levels and just how risky this massive amount of debt may be to the U.S. economy.
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Behind The Corporate Bond Market’s $10.5 Trillion Debt ‘Bubble’
Can we acknowledge that the fed does not control rates.
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They would've put madow on this but they needed views
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Considering a given company high yield is dubious. A good company can be considered high yield just because short term isnt enough to repay it. But the business and sales continue, it can be easily repaid in 10 to 15 years. Such companies like ford, verizon, at&t are in this position. They arent going bankrupt, but the business continues and in long term they will repay
What I don't get is, how can you separate the corporate bond from its stock? If their debt level is too much, shouldn't that reflect on their stock price as well. Who wants to just buy a stock of a company whose debt ratio is high and likely to bankrupt leaving stockholders with nothing after liquidation. The financial world is so illogical.
Buy physical silver and protect yourself from inflation coming #wallstreetsilver
Why do they make it so easy to borrow money ????
The issue is there is no risk in business once you reach a certain size, since the government is assuming ALL risk. Businesses have no incentive to get better. Eventually this will all blow up.
bUy BItCOin
For how much longer will the world tolerate Americans creating money out of thin air to keep their uncompetitive companies afloat and literally financed by the rest of the world?
This is international robbery American style!
0:56, no, it was planned …
Yup! Some simple honesty instead of the usual dribble cloaked in financial garbage speak.
Those crossing the border aren’t illegals. They are undocumented Democrat voters.
This is why you don’t mess up capitalism
Oh so NOW they talk about the debt
I never understood CNBC's point in making these videos. Why is a CNBC editor giving us his opinion on bonds market instead of actual specialists in the field with actual information to present? Instead they keep citing their own articles on the subject, using their own execs, and presenting them as unbiased facts…
Well there making this mainstream now….. Somethings going to happen…. Lol no mention of the buybacks these company's have funded majority with debt vrs paying down there debts…..
Audio is weird
As long as the US Dollar is the world's currency, markets can crash and will bounce back all over again…. The key is the US Dollar. So mean while, don't worry, just spend spend and the whole worlds pays for America's debt. Don't worry, be happy…. lol…lol….
Fun coupons!!! ?
And china owns huge amounts off the Debt.
The end is near……..
Stonks!!! ????
So can we just finally agree Capitalism doesn't work or are we going to keep on with this song and dance for another generation?
PS: If your going to reee at me for saying Capitalism is bad, I don't care, shove off you neo-liberal bootlickers.
https://youtu.be/0tR8XeIVW-w History of #GreatReset by Draghi
Interest rates have been rising the past couple weeks and making the stock market pretty volatile. I wonder what may happen if yields go up to 2%.
So what! Time to help student loans victims, and not these greedy thieves breaking the laws over and over again
Short gme, amc, cineplex, air canada and Ford?