A benchmark gauge of U.S. company credit risk fell for a ninth day in the longest stretch of declines since December 2010 after the Federal Reserve’s upgraded assessment of the world’s biggest economy drove investors to higher-risk assets.
Bond investors are planning to hedge against a sudden rise in interest rates that would trigger a selloff parallel to 1994, according to Rizwan Hussain, a New York-based credit strategist at Morgan Stanley.
The cost to protect the debt of U.S. companies against default held at about a four-day high as investors waited for lawmakers to settle differences on the federal debt limit, outweighing companies beating profit expectations.
The cost to hedge against losses on U.S. government debt rose to the most in six weeks as investors bet the Federal Reserve will put more cash into the economy and a report showed home prices continued to drop.
Investors are seeking protection from a public backlash against nuclear power producers as the threat from earthquake-damaged reactors in Japan stokes calls by U.S. lawmakers to limit plants in this nation.
Corporate bond sales are poised for their worst month in a decade, while relative yields are rising the most since Lehman Brothers Holdings Inc.’s collapse, as the response by lawmakers to Europe’s sovereign debt crisis fails to inspire investor confidence.
Prices of credit-default swaps tied to the debt of U.S. companies snapped the biggest two-day gain since March, as comments from European officials bolstered optimism that the region’s debt crisis may be contained.