Long-Term Bear Market in Top Shelf Bonds Persist

Details from Bloomberg

• The US accounts for the greatest volume of distressed debt in the Americas
  • The media sector had the greatest amount of distressed debt as of the latest week
    • Bausch Health Cos. had the most distressed debt outstanding of any issuer as of Feb. 17, data compiled by Bloomberg shows

US Treasury Bonds

The pendulum swings from extreme optimism to extreme pessimism. For the life cycle of the market, nothing has changed. It doe not matter if you start your analog correlations from 1950 or from 2000 or start at 1854 the market’s life cycle will never change.

The bonds along with most others have corrected the emotional buying highlighted in red on the monthly bar.  Only the Risk markets have not yet made adjusted for the profit chase post-pandemic liquidity injection.

The bonds have only made it halfway through their major bear with par as the next target and a measured move sees 86 on the 30-year bonds.

All trends are down, and the set-up model (TEM) supports the trends in motion long-term, Intermediate-term, and Short-Term.  Refer to the annotations on the chart, just click to enlarge.

US Bankruptcy Filings Surge At Fastest Pace Since 2009

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For the past year, both the Biden White House and the Fed have been desperate to usher in a (mild) recession in the US to break the back of runaway inflation and the wage-price spiral with little success. But judging by the surge in bankruptcy filings, they are about to get their wish.

One month ago, when looking at the recent pace of large bankruptcy filings (those with more than $50MM in liabilities), we noted a troubling trend: in the first month of the year, the number of US bankruptcies topped 20, the highest in any other January dating back to 2010. Back then, 25 filings were seen as the economy was still reeling from the aftermath of the GFC.

The spike in defaults was not a fluke, and according to Bloomberg data, one month later – as of the end of February – no less than 39 large companies had filed for bankruptcy in the US so far this year, as February’s pace matches that of January; the YTD total represents the fastest pace of companies filing for bankruptcy since the immediate aftermath of the global financial crisis in 2009. By comparison, US bankruptcy courts had seen 63 large filings at this point in 2009.

Last week’s seven large filings — those tied to at least $50 million of liabilities — include the liquidation of generic drugmaker Akorn and the Chapter 11 filing of Covid-19 testmaker Lucira Health

This year, some of the most notable bankruptcy filings have been festive retailer Party City Holdco Inc, mattress maker Serta Simmons Bedding LLC, and cryptocurrency lender Genesis Global Holdco.

The pile of dollar-denominated corporate bonds and loans in the Americas trading at distressed levels rose to $237.2 billion in the week ended Friday, about a 1.63% increase from $233.4 billion a week earlier, according to BBG data.

• The media sector had the greatest amount of distressed debt as of the latest week

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