Caution is required in today's challenging corporate bond market

The market for corporate bonds has been challenging. Large scale writedowns from high-profile banks,...

The market for corporate bonds has been challenging. Large scale writedowns from high-profile banks, slowing UK growth and a US economy heading for recession amidst mounting inflationary pressures have combined to create considerable volatility. During the first quarter of this year, investors remained cautious as the fall-out from the credit crisis continued. Hedge funds moved to reduce their debt levels and credit spreads widened. To help stabilise financial markets, the Federal Reserve aggressively cut official rates and took measures to underpin the financial system. This culminated...