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2017 was a Banner Year for Debt. Spreads continue to collapse and the ease at which leveraged debt is refinanced at lower yields is nothing short of amazing.

Net Issuance of Investment Grade Bonds

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Speculative Default Rate

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Defaults picked up in 2016 with the collapse in the price of oil. A recession, higher rates, less liquidity, or even a change in investor attitudes, can sink speculative issues in 2018.

Repriced Leverage Loans

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Net Asset Purchases

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A number of problems are going to move to the forefront in 2018. Reduced central bank liquidity is one of them.

Meanwhile the Fed is on the lookout for "inflation".

It's right in front of their noses on asset prices including homes, leveraged loan rollovers at ridiculous prices, and equities in general.

Mike "Mish" Shedlock