Morgan Stanley Warns Credit Bubble Set to Burst

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Morgan Stanley Warns Credit Bubble Set to Burst

(New York)

Morgan Stanley is getting bearish. The research team there has come out with a new outlook on credit markets, and it is gloomy. The bank says that companies have issued way too much debt, especially because they used the cash to buy back shares, and with rates and yields likely to rise, this could put many in trouble. Apple is one of the companies cited as at-risk. Speaking on how rates will rise, MS said ""We think there is way too much complacency regarding what is a notable and growing shift in central bank policy globally … Markets expect a seamless unwind [of quantitative easing]. We don't". Morgan Stanley thinks investment grade credit markets could be hit the hardest of all.

FINSUM : This is not a view we have heard lately, as some have been saying better quality credit is where you should have your money right now. If rates do rise, we tend to think investment grade will perform better as there will certainly be a flight to quality, and shorter durations on corporate bonds will protect prices somewhat versus Treasuries.

  • Morgan Stanley
  • bonds
  • credit
  • investment grade
  • Apple

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Bonds

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