30 October 2023
Bankers and investors are wondering when something will snap. The significant drop in government bond prices, particularly with U.S. Treasury yields rising above 5% for the first time since 2007, has caused unease among bankers and investors. Despite market moves being orderly, there’s a quiet alarm over the state of corporate debt due to increasing borrowing costs and a slowdown in bond issuance. Defaults are up notably, with distressed exchanges hinting at deeper issues for companies under financial strain. This tension in the bond market is a clear sign of stress, even if a full-scale disaster has not yet unfolded.