Part 6/9:
The data reveals a dramatic loss of momentum in the U.S. economy, reflecting what experts describe as an evolving "forgot how to grow" economy—an insidious downturn that is neither distinctly negative in GDP nor significantly positive in growth terms. Despite a prolonged period of low interest rates, which initially quelled fears of rising spreads, the underlying anxiety persists.
A Disturbing Trend in Credit Spreads
Some compelling markers of this trend have emerged. Notably, the current spread on BBB-rated corporate bonds has dipped below 100 basis points for the first time since 1998. Moreover, the Bank of America Merrill Lynch’s Master II Index also reflects similar trends, becoming a historical indicator of impending instability.