UBS warns U.S. credit score markets are too complacent as junk bond spreads close to decade lows

UBS warns that U.S. company credit score markets are exhibiting extra complacency than equities, with high-yield debt valuations approaching multidecade highs … credit score markets are out of step and underpricing the danger of a slowdown.

• threat premiums within the U.S. junk bond market are close to their lowest ranges in a decade, implying an excessively optimistic outlook
• pricing suggests over 5% international financial development this 12 months, nicely above UBS’s 2.7% forecast and even inventory market expectations of four.5%
• UBS sees this as an indication of “credit score complacency” notably within the U.S.
• With elevated inflation, UBS warns that threat premiums might widen considerably, particularly if the financial system weakens.

UBS information comes through Bloomberg (gated).

This text was written by Aaron Cutchburt at investinglive.com.