By The Economist online….
THE stockmarket’s positive mood has managed to survive the tensions over North Korea’s nuclear programme. In part, this is because investors believe that global economic growth and corporate profits will continue to do well.
One reassuring signal is from the corporate bond market. The global default rate on speculative (junk) bonds has been dropping; fewer companies are going bust (see chart).
This is the first time the default rate has dropped below 3% since October 2015 when a sudden fall in the oil price caused cashflow problems for the energy sector, particularly in the US. Moody’s, a rating agency, thinks the trend will continue, with defaults falling to 2.6% by the end of the year and 2.3% in 12 months’ time.
This is the first time the default rate has dropped…
Read more here: A positive sign from the bond market