KBRA Releases Research ? Credit Finds Itself in a Riskier Place

BY Business Wire | ECONOMIC | 09/30/22 11:08 AM EDT

NEW YORK--(BUSINESS WIRE)-- KBRA releases research contending that the U.S. economy is weakening as a result of mounting inflation-related headwinds, including those arising from the Federal Reserve?s aggressive catch-up in tightening financial conditions.

KBRA believes the central bank?s near singular focus over the near term on taming inflation runs the risk of overshooting its goal of curtailing demand, thereby increasing the risk of a hard landing. For credit spreads, which have held in close to long-term averages, the gravitational pull is wider into 2023. Important offsets to the effects of the slowdown are the strong balance sheets of consumers and businesses as well as the sound condition of the financial system.

Click here to view the report.

Related Research

  • Van Hesser?s 3 Things in Credit: A Weekly KBRA Podcast

About KBRA

KBRA is a full-service credit rating agency registered in the U.S., the EU, and the UK, and is designated to provide structured finance ratings in Canada. KBRA?s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.

Source: KBRA

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

fir_news_article