Leveraged loans suffer biggest loss since start of pandemic as bear market widens
Financial markets were troubled today as investors continued to digest Friday’s surprisingly high inflation figures and assess the Fed’s ability to navigate a soft landing for the economy as it s has been trying to control high inflation for decades. The leveraged loan market was not immune to volatility today, with the S&P/LSTA Leveraged Loan Index posting a negative return of 0.84% during the session, after a down 0.30% on Friday. Today’s decline was the index’s largest daily decline since March 23, 2020, when the pandemic first took deep root. Heading into today, the index only saw its three biggest one-day declines since 2020 last month. The asset class has now posted a negative return of 2.77% year-to-date. .
Underlining the worrying picture of inflation so far this year, the Federal Reserve may now consider a surprise interest rate hike of 0.75% at its meeting this week, according to a WSJ report. The central bank has not raised interest rates by 75 basis points at a meeting since 1994, and already raised the rate by 50 basis points at last month’s meeting, the first time since 1994 .
An expanded dataset is available via the link at the top of the story for LCD Research subscribers.