Wall Street rises as materials and crypto stocks offset continued bond sell-off
By Matt Tracy
WASHINGTON (Reuters) -U.S. corporate credit spreads widened on Monday as the U.S. stock market closed below a key technical indicator for the first time in months.
The average option-adjusted spread on U.S. high-yield corporate credit, or the premium over Treasury spreads paid by companies to borrow, widened six basis points between Friday and Monday’s market close, according to the ICE BofA U.S. High Yield Index.
Spreads on investment-grade corporate credit also widened on Monday. They closed Monday at 84 bps from 83 bps on Friday, according to the ICE BofA U.S. Corporate Index.
The spread widening follows the S&P 500 and Nasdaq closing below their 50-day moving averages on Monday for the first time since April 30.
The trend carried into Tuesday trading with global shares declining ahead of AI giant Nvidia’s earnings, as investor fears grow about a weakening U.S. economy and a potential bubble caused by the AI market frenzy.
"It is a theme everyone is starting to think about," said one portfolio manager for high-yield corporate bonds, who was not authorized to speak publicly about specific sectors.
"But I don’t see it blowing up in the high-yield or even investment-grade bond market - it’s never going to be big enough to cause pain for people."
