From Sridhar Natrajan and Michelle Davis at bloomberg.com:
Debt investors are a nervous lot these days, and new signs that global turmoil is weighing on the U.S. economic outlook are only adding to their angst.
Measures of corporate credit risk spiked immediately after a Labor Department report showed that payrolls rose less than projected last month, wages stagnated and the jobless rate was unchanged. Investors are now demanding more than they have in three years to own junk bonds, which are on track to cap off their worst week this year.
Frustration is growing that even after seven years of easy-money policies, economic growth remains sluggish. While the Federal Reserve is signaling that it’s in no hurry to normalize interest rates, investors are increasingly worried about what the data will mean for earnings at companies that have sold $9.3 trillion of corporate bonds since the start of 2009.
“At some point the financial markets say, ‘Enough about monetary stimulus, we need real growth,’” said Jack McIntyre, who helps oversee $54 billion at Brandywine Global Investment Management LLC in Philadelphia. “Bad things happen in a low-growth environment. There’s more risk, more potholes.”
To continue reading: Credit Investors Bolt Party
