Credit was somewhat cushioned during the first legs of 2022's bear market, but no longer. Yields on US high-yield bonds surged the most yesterday since March 2020, to an average 8.4%, for a total-return loss of 2.6% in one day.
U.S. investment-grade bonds also had their biggest one-day decline since March 2020, with average yields on the notes climbing to the highest since 2009, of 4.89%.
The steady drip of losses in credit, driven first by rates, then by credit spreads, and now by both, is accelerating. This is suddenly a new financing regime that'll be punishing for companies forced to borrow in the near term.
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