The U.S. junk bond market's bonds are highly sensitive to future market expectations. It is precisely because they are overly sensitive that various rating agencies consider these bonds to have greater risk due to excessive volatility, resulting in relatively low ratings. This is why they are commonly referred to as the junk bond market.
In the past two weeks, due to the ongoing disturbances, the sea conditions have been quite rough, and the junk bond market has been inactive for two weeks due to the weather.
After nearly two weeks of silence, the market has welcomed the issuance of new junk bonds for the first time in the past two days. The new junk bonds aim to raise $2.5 billion, which is a significant issuance amount. The resumption of junk bond issuance is an important signal.
Such a large-scale issuance and fundraising also indicate that the overall "risk appetite" in the market is beginning to warm up significantly, meaning that a small group of people who know certain things we do not are starting to feel restless. This is one of the signs favorable for the rebound of stocks and other risk assets.
As risk appetite rebounds, U.S. stocks and treasury bonds have shown signs of stabilization and rebound to some extent. In the past two days, junk bonds have also recorded the largest single-day gain since December 2023.
The storm is gradually calming down, and fishing boats are successively heading out to sea to fish...
