The credit market hasn’t cracked yet
It is undergoing a painful repricing, but not veering into dysfunction
At their best, capital markets hold up a mirror to the real economy. They rise and fall in tandem with companies’ fortunes, encouraging investors to direct money towards the firms most likely to make a return on it. But the arrow of causality can also fly the other way. A dysfunctional market can choke off the supply of capital even to healthy firms, forcing them into default for no better reason than that financial conditions have tightened.
This article appeared in the Finance & economics section of the print edition under the headline “Bloody but unbowed”
From the May 28th 2022 edition
Discover stories from this section and more in the list of contents
Explore the editionMore from Finance & economics
Will America’s crypto frenzy end in disaster?
Donald Trump’s team is about to bring digital finance into the mainstream
Do tariffs raise inflation?
Usually. But the bigger problem is that they harm economic growth and innovation
European governments struggle to stop rich people from fleeing
Exit taxes are popular, and counter-productive
Saba Capital wages war on underperforming British investment trusts
How many will end up in Boaz Weinstein’s sights?
Has Japan truly escaped low inflation?
Its central bankers are increasingly hopeful
How American bankers dodged the MAGA carnage
The masters of the universe have escaped an anti-globalist revolt