When the monetary authorities are forced to raise interest rates, they will likely do so hesitatingly and apologetically. They will then be forced to play catch up to be taken seriously by the markets. Rising rates will again not be kind to the credit markets. But what of the chastened and reformed bankers and investors, you might ask. Won’t they enforce greater credit market discipline after their brutal lessons from the credit crunch? If the current mania for junk bonds is any guide, the answer is a resounding NO!
Read the full newsletter at the link below.Canso April 2010 Corporate Bond Newsletter