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Entries in Fed (6)


Did A Butterfly Flap Its Wings In Corporate Bond Markets Last Week?

In this podcast I continue to discussion from last week on corporate bond market bubbles and liquidity, what the risks are, and how worried we should be. I take my point of departure in the decision, last week, by Aberdeen Asset Management to set up a $500M credit line, as a precaution, to fund redemptions from its bond funds. I also give a brief overview, in numbers, of the increase non-financial corporate bonds outstanding since 2007*. 

Articles quoted/used:

The FT Jun 15th 2015, David Oakley - Aberdeen takes safety measures against risk of bonds sell-off

The FT Jun 18th 2015, Robin Wigglesworth - Liquidity pitfalls threaten parched markets

FastFT - Investors flee US junk debt for second week

Notes from the Hedge Jun 17th 2015 - Fund Management CEO Reminds Investors How Funds Are Managed


* In the podcast I note that corporate debt outstanding was up 47% in the U.S. at the end of 2014, but I don't mention the starting point for this calculation, which is 2007 (SIFMA data). This year is also the starting point for the calculation of a reduction in household leverage of 18%

The intro music is courtesey of the Lino Rise Project at​ee-int​ro-mus​