In this webinar, we will use Moody’s Analytics EDF metrics to assess the impact COVID-19 has had so far on corporate credit risk.
We highlight company-, industry-, and country-level dimensions, including both risks and opportunities. In terms of investment ideas, we show that low default risk bonds, and the stocks of low default risk firms, have strongly outperformed during the international phase of the pandemic, consistent with a “flight to credit quality”. Finally, we examine the effects of a pandemic macroeconomic scenario to show which countries and industries could be most at risk going forward.
- Sam Malone PhD, Senior Director-Research
- Glenn Levine, Director-Research
- Yukyung Choi, Associate Director-Senior Research Analyst
- Ryan Donahue, Assistant Director-Product Strategist
January 9's unexpectedly steep jump by initial state unemployment claims reminded us of the considerable loss of business activity to COVID-19-inspired shutdowns be they voluntary or forced.
An extraordinarily accommodative monetary policy helps financial markets view the Democratic Party's takeover of Congress in a positive light.
Despite a positive outlook for 2021's corporate earnings, the investment performance of U.S. equities and corporate bonds may be uninspiring at best.
Weekly Market Outlook: Equity and Corporate Debt Rallies Withstand Record COVID-19 Hospitalizations for Now
Hospitalizations related to resurgent COVID-19 have been setting new record highs, but so has the market value of U.S. common equity.
Not only has the market value of U.S. common stock set a new record high, so have the core pretax profits of U.S. corporations.
Corporate credit has largely recovered from the terrible slump prompted by COVID-19. In general, corporate bond yield spreads are now the narrowest since February 2020.
COVID-19 will determine the near-term fate of the U.S. and world economies in 2021. If resurgent coronavirus infections prompt another broad shutdown of businesses, US real GDP will again contract sequentially. At the other extreme, a vaccine for the virus would significantly enhance 2021's outlook.
Republican control of the U.S. Senate and Democrat control of the House effectively precludes radical changes in the U.S. tax and regulatory framework.
The latest sell-off of equities anticipates a meaningful widespread drop in business sales brought on by COVID-19's second wave.
U.S. business activity may have lost some of its earlier unsustainable momentum, but the ongoing growth of expenditures weighs a renewed contraction of sales and profits.