Bond risks in ‘overpriced’ US stocks

The most “overpriced” US equity markets for years have increased the risks for corporate bond markets, according to the chief economist at Moody’s Capital Markets Research.

Writing in Moody’s credit markets bulletin, John Lonski said US stock markets could yet reach new highs despite the slow growth of corporate profits.

Whether US markets set new records depends on key US interest rates staying at “extraordinarily low” levels, and as long as corporate bond yield spreads “do not swell”.