According to Jin Ten data, the Royal Bank of Canada Global Asset Management pointed out that as the net issuance of high-rated corporate bonds is expected to reach $1 trillion, the market needs more investors to participate in order to digest the additional $300 billion of debt this year; otherwise, the U.S. corporate bond market will face a risk of sell-off. Andrzej Skiba, head of the U.S. fixed income department, stated that the yield curve is steepening, the premium between long and short-term bonds is expanding, and about $200 billion may flow from money market funds to corporate bonds. The remaining funds may come from mortgage-backed securities.
He added that if new funds cannot be attracted to subscribe to the newly added debt for building AI data centers and acquisition financing, the average spread of high-rated corporate bonds may widen by 20 to 30 basis points due to the repricing of technology and other sectors. Investors need to be aware that under the leadership of the next Federal Reserve Chairman Kevin Warsh, the 'Federal Reserve put' may be much weaker than in the past.