BofAML has nice wrap on deteriorating credit markets via Zero Hedge:
[JPM strategist] Panigirtzoglou starts off by pointing out that the “supply chain disruptions and the demand shock caused by the COVID-19 crisis are likely already creating cash flow problems for certain businesses in particular smaller companies and those belonging to sectors most affected by the crisis, e.g. travel, transportation, leisure, lodging”, something we showed yesterday with the following chart.
In response, central banks or governments are already hinting to providing credit support. For example, the JPM strategist notes that “Boston Fed’s Rosengren on Friday suggested that the Fed could consider a facility that could buy a broader set of assets.” Separately, the Bank of England’s next Governor hinted that the BoE could get involved in providing supply chain finance. But unless that credit support by central banks and/or governments is “broad, fast and direct, we note credit markets are facing an increased risk of the cycle turning with a lot more downgrades or even defaults over the coming months”, according to JPMorgan.
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
