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U.S Credit Strength Is Baffling Fed Watchers

The Federal Reserve’s efforts to tighten financial conditions across the economy haven’t made much of a dent in corporate America yet.

By Olivia Raimonde & Craig Torres | October 31, 2023 at 10:02 AM
Jerome Powell

To have a shot at taming inflation, the Federal Reserve is intent on tightening financial conditions across the economy. But they haven’t made much of a dent in corporate America yet.

The extra yields investors demand for risk in the U.S. investment-grade and high-yield bond markets have remained below their 20-year averages and well under levels seen during historical times of stress in the economy. Borrowing remains robust, one measure of credit quality is improving at a record rate, and recent earnings reports for some of the nation’s most indebted companies have come in stronger than expected.

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