US stocks are on increasingly unstable ground as credit spreads begin widening due to greater bankruptcy risk, rising yields and a steepening yield curve.
They say you can’t run away from your past. Likewise, markets can’t escape from their fundamentals indefinitely. For stocks, profits are key; for sovereign bonds it’s taxes; and for credit it’s default rates. Bankruptcy filings have been rising and are approaching their post-pandemic highs. That’s not good for credit or the stock market.
