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Expand chart
Data: S&P Global; Chart: Axios Visuals

The fear of missing out (FOMO) is alive and well on all sides of the corporate bond market.

What's happening: Much attention has been paid to the impact that rising interest rates have had on equities. But over in bonds — as U.S. Treasury yields inch higher from record lows — companies are racing to borrow money and avoid being shut out of what could end up be a fleeting opportunity for cheap money.

  • While issuers paying investors more for the risk of owning their debt is a welcome change for buyers, portfolio managers' FOMO stems from the idea of committing too early in the cycle and missing out on even higher yielding investments down the line.

Between the lines: An avalanche of deals in the corporate bond market is nothing new. The earlier boom accelerated when a collapse in interest rates created insatiable issuer demand.

By the numbers: Investment grade issuance already reached more than $95 billion in March, BofA data show. After selling $65 billion of high grade debt just last week, some predictions called for $50 billion more this week, Bloomberg reports (h/t on the FOMO analogy).

High yield: Riskier borrowers are grabbing for cash too.

  • Primary high yield issuance last month hit $37.3 billion, just below the $37.5 billion monthly record from 2012. Volume for the first two months of the year combined was $89.2 billion, up 31% from the same period in 2020, according to S&P Global Market Intelligence’s LCD.
  • Among the army of issuers, this week American Airlines priced a massive $10 billion bond and loan deal backed by its frequent-flyer program — representing the largest debt sale ever for an airline.

Yes, but: The stampede may be a temporary phenomenon, BofA credit strategist Hans Mikkelsen says.

  • “Investors are afraid of buying. You like higher yields but they don’t want to catch a falling knife if interest rates go up. So there has been some indigestion in the market,” Mikkelsen says.

What to watch: President Biden signed the $1.9 trillion American Rescue Plan Act yesterday. That stimulus, coupled with continued progress on vaccinations, falling coronavirus infection numbers, and improving economic indicators, adds fuel to the higher rates fire.

  • "The economy is going to be on fire and you are going to get economic data beating expectations solidly and there will be upward pressure on interest rates because of that," Mikkelsen adds.

Go deeper

School principals are not OK

Principal Alice Hom (purple jacket) of New York's Yung Wing School P.S. 124 near a vaccination van in November. Photo: Michael Loccisano/Getty Images

The overwhelming majority of secondary school principals experienced frequent stress last school year, according to a RAND Corporation report out Wednesday.

The big picture: The stress levels among female principals and principals of color were especially stark, with nearly 40% in these groups reporting constant job-related stress, compared to about 24% of male principals and 26% of white principals.

It's official: Stock market having worst start to year ever

Data: FactSet; Chart: Axios Visuals

It's been a decidedly ugly start to the year for the stock market, with particular pain in the tech trade.

State of play: As of the end of trading Tuesday — the 16th session of the year — 2022 is now, officially, the worst-ever start in the history of the S&P 500, according to data from Ned Davis Research, a stock market research shop.

Surprising pandemic side effect: Soaring trade deficits

Source: Census Bureau and Bureau of Economic Analysis; Chart: Axios Visuals

Inflation and jobs may get all the economic headlines, but meanwhile a big shift is taking place in the underpinnings of the world economy: The U.S. trade deficit is soaring.

What's happening: Americans' spending on imported physical goods has gone through the roof, while exports are growing slowly, making the U.S. the world's consumer of last resort.

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