High-Grade Corporate Bond Market "Could Get Ugly" If Interest Rates Rise Fast

When liquidity is most needed in the high-grade corporate bond market, it “could get ugly,” Bank of America Merrill Lynch predicts. While total volume has increased meaningfully since 2006, don’t let that fool you. The markets are not liquid, the analysts say, pointing to the Volcker Rule and central bank quantitative easing that has put investors reaching for yield on a ledge.

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High-Grade Corporate Bond Market Market - Don't conflate volume with liquidity

High-grade corporate bond trading has nearly doubled in the decade following the global financial crisis, BofA’s Hans Mikkelsen and Yunyi Zhang observe. With annual volume at $4.1 trillion, don’t make the mistake of conflating volume with liquidity.

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