US: Financial sector shock would spill over into real economy – NBF

FXStreet Team FXStreet

All good things must come to an end. Krishen Rangasamy, an analyst at National Bank of Canada, examines the exposure to corporate bonds.

Key quotes

“The good news is that the Federal Reserve has sprung into action early in this crisis by injecting liquidity via quantitative easing and other measures.”

“The bad news is that there are still dangers lurking that could wreck financial markets despite the Fed’s best efforts.”

“More than a quarter of corporate bonds are held by insurance companies and almost a fifth is held by mutual funds and ETF’s.”

“In other words, such financial sector shock (if any) would likely spill over quickly to a real economy that’s already weakened by virus-related disruptions.”

Author

FXStreet Team

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