Read more from The Macro Tourist
I rarely follow former FOMC Board Members as too often their "private-sector-personas" are way tougher than their "sitting-on-the-board-guises". However, this week's Bill Dudley's Bloomberg Opinion piece caught my attention - "Two Risks to Stability Build Amid Short-Term Calm".
Sure, his economic orthodoxy shines through with his "chronic budget deficits require large increases in the supply of Treasury debt" rhetoric. I have little interest in discussing the first risk Bill highlights in his article. Most readers know I am a huge fixed-income grizzly, not because we will have trouble selling debt, rather due to what I believe will be an increase in inflation in the coming years. However, you don't need another bearish bond diatribe from me.
But the other risk Dudley singles out is interesting. From the article:
The second long-term risk is the buildup of corporate debt — especially in the BBB rated and high-yield areas. In recent years, U.S. corporations have taken advantage of low interest rates and narrow corporate credit spreads to increase their leverage and move down the credit-quality curve. For many chief executive offic
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