According to credit rating agency Standard & Poor, US default rates edged up sharply in February and has reached highest level since 2009, surpassing the levels seen during the collapse of Lehman Brothers. In February it has jumped to 3.3%, compared to 2.8% in January.
These numbers may not look big but one needs to consider FED's large balance sheet and near zero interest rates, which might be keeping a lid over the numbers. Moreover when conditions deteriorate these numbers could edge up pretty fast. Back in 2007, US corporate default rate was 1.02%, that edged up to 2.96% during Lehman collapse and a staggering 12% in 2009 before FED introduced easing. Standard & Poor is forecasting that default rates will edge closer to 4% by end of 2016.
Latest data shows downgrade is on the rise. In February S&P upgraded only 20 companies while downgrading 110, bringing the ratio to 5.5:1. Spread is also on the rise. Average spreads between CCC or lower corporates and US treasuries have reached more than 20%. This phenomenon is also impacting investment grade bonds, where spread is also on the rise.
US is at a critical juncture, when any adverse shock in the economy such as China hard landing could once again push it to the brink.


TrumpRx Website Launches to Offer Discounted Prescription Drugs for Cash-Paying Americans
Dollar Near Two-Week High as Stock Rout, AI Concerns and Global Events Drive Market Volatility
Japan Economy Poised for Q4 2025 Growth as Investment and Consumption Hold Firm
Silver Prices Plunge in Asian Trade as Dollar Strength Triggers Fresh Precious Metals Sell-Off
CK Hutchison Unit Launches Arbitration Against Panama Over Port Concessions Ruling
Anthropic Eyes $350 Billion Valuation as AI Funding and Share Sale Accelerate
Asian Markets Slip as AI Spending Fears Shake Tech, Wall Street Futures Rebound
Global Markets Slide as AI, Crypto, and Precious Metals Face Heightened Volatility
South Korea’s Weak Won Struggles as Retail Investors Pour Money Into U.S. Stocks
Australia’s Corporate Regulator Urges Pension Funds to Boost Technology Investment as Industry Grows
Australian Scandium Project Backed by Richard Friedland Poised to Support U.S. Critical Minerals Stockpile
AMD Shares Slide Despite Earnings Beat as Cautious Revenue Outlook Weighs on Stock




