Make Kitco Your Homepage

Investors bet on credit deterioration on Treasury-Fed divide

Kitco News

NEW YORK (Reuters) - The price of U.S. corporate debt fell on Friday morning as investors bet that credit conditions could deteriorate if key pandemic lending programs at the Federal Reserve are allowed to expire on Dec. 31.

U.S. Treasury Secretary Steven Mnuchin said on Thursday that some of the Fed’s stimulus programs, which have established the central bank as a lender of last resort to U.S. corporations and municipalities, should be allowed to expire and that the unused funds should be given to Congress to reallocate. That puts Treasury at odds with the Fed, which who said earlier this week the programs should be extended.

Markit's high-yield credit-default swap index CDXHY5Y=MG fell in price, a bearish signal, to 107.42% in Friday morning trade. The spread of Markit's investment grade CDX CDXIG5Y=MG widened to its highest since Nov. 4, also a bearish signal, last at 55.61 basis points.

Reporting by Kate Duguid; Editing by Chizu Nomiyama

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.