In the current US stock market, there is a puzzling phenomenon: share prices of companies with weaker balance sheets outperform those with stronger balance sheets. In the bond market, however, the cycle of leveraged assets has all but collapsed. According to many analysts,This divergence between the stock market and the bond market seems unsustainable, and under the current strong sentiment in the US stock market, highly leveraged stocks represented by energy stocks may not escape the sell-off tide.

The latest data from Bloomberg showInsurance costs for junk-rated companies soared to nearly two-year highs on Thursday, while a new survey of fund managers conducted by Bank of America Corporation this week showed that systemic credit events were the fifth largest tail risk they faced.But the latest data from Goldman Sachs Group show that although credit spreads, a key indicator, are gradually expanding into dangerous areas, stocks of leveraged companies continue to outperform healthier companies with financial indicators.

As tighter financial conditions, including credit, pose a threat to the economic recovery, companies with higher debt burdens or lower ratings will find it harder to achieve the profits needed to value their shares. HSBC and Wells Fargo & Co Investment Research Institute recently lowered their year-end target for the S & P 500 index, saying there was a risk of a slowdown in US economic growth.

Max Kettner, chief diversified asset strategist at HSBC, said in an interview: "We have begun to see credit spreads widen, preferring to exit high-beta and highly leveraged industries and stocks in such an environment. "

Goldman Sachs Group's basket ranks S & P 500 stocks according to Altman Z-score, which measures the likelihood of bankruptcy. By this standard, some of the riskiest large-cap stocks includeCarnival Cruise (CCL.US) $和$Delta Airlines (DAL.US) $。

It is true that equity investors do not actively seek to invest in leveraged companies, but stocks with weak balance sheets have outperformed, to some extent reflecting the shift to so-called seemingly cheap companiesThese companies tend to benefit from rising inflation expectations.For example, highly leveraged energy stocks, which are included in the value stock index, are the direct beneficiaries of price increases caused by surging consumer demand and supply chain chaos.

While share prices of companies with weak balance sheets have performed relatively well, they have also fallen about 11 per cent so far this year. By contrast, the S & P 500 is down 18 per cent so far this year.

"companies with the least leverage tend to focus on technology stocks, financially sound growth stocks and more expensive stocks." Dan Suzuki, deputy chief investment officer of Richard Bernstein Advisors, said. "as a result, with almost all of these stocks tumbling, the relative performance of more leveraged companies has been boosted, which are more likely to be defensive targets and inflation beneficiaries."

Oil exploration companies, which have benefited from the rise in crude oil prices this year, rose the most in the Bloomberg leveraged stock index. To$Western Oil (OXY.US) $The company's share price, for example, has risen by a staggering 121% so far in 2022. However, investors in the bond market seem to have a very different attitude towards cyclical energy companies than stocks, mainly because their earnings tend to slump when the economy slows. This has been reflected in the price of the company's bonds, which have fallen more than 6 per cent so far this year.

In the past four days, investors have gone from about $14 billion in assets, according to Bloomberg.Bond Index ETF-iShares iBoxx High yield Corporate Bonds (HYG.US) $About $711 million was withdrawn, and $5.8 billion has been withdrawn so far in 2022, making the ETF's performance and size likely to face its worst year ever.

“What we see in the US high-yield bond market is the normal response.Regina Borromeo, a portfolio manager at Robeco Institutional Asset Management, said. "the riskier companies are, the more likely they are to be under great pressure on a risk-adjusted basis, as market concerns about economic growth are growing and the macro outlook still faces huge challenges."