A snippet from this morning's testimony by Chairwoman Yellen
Chair Janet L. Yellen
The Economic Outlook
Before the Joint Economic Committee, US Congress, Washington DC
May 7, 2014
"...In addition to our
monetary policy responsibilities, the Federal Reserve works to promote
financial stability, focusing on identifying and monitoring vulnerabilities in
the financial system and taking actions to reduce them. In this regard, the
Committee recognizes that an extended period of low interest rates has the
potential to induce investors to "reach for yield" by taking on
increased leverage, duration risk, or credit risk. Some reach-for-yield
behavior may be evident, for example, in the lower-rated corporate debt
markets, where issuance of syndicated leveraged loans and high-yield bonds has
continued to expand briskly, spreads have continued to narrow, and underwriting
standards have loosened further..."
We are starting to see some differentiation in the HY credit market, and that could continue the rest of the year.
Richard Travia
Director of Research
No comments:
Post a Comment