Cracks appear in high-yield bond market in the United States, bankruptcy events of automobile-related companies may weaken the momentum of US stock market rise.

Recently, cracks have appeared in the high-yield bond market in the United States, and investors are beginning to be cautious of signs of rising credit risks. Two bankruptcy events related to automotive companies, the bankruptcy protection filing of automotive parts supplier First Brands, and the planned liquidation of used car loan company Tricolor Holdings, have caused turbulence in the private credit market and added new uncertainty to the high-risk corporate bond market. Market concerns, which could weaken one of the key supports for the recent rise in U.S. stocks, long-term corporate financing costs at low levels. In the past, investors were willing to accept lower risk premiums (i.e., credit spreads) to provide loans to lower-rated companies, which was seen as a positive signal for companies with strong financial positions and improved profit quality. However, overly tight credit spreads also mean that some financially fragile companies can issue bonds on more lenient terms, thus increasing potential risk. Against the backdrop of recent financing in artificial intelligence and the high valuations of indices such as the S&P 500 and Nasdaq, investors' attention to the credit market has further increased. After JPMorgan Chase announced robust third-quarter results, CEO Jamie Dimon said the company lost $170 million due to Tricolor, suggesting this may just be the tip of the iceberg. Dimon warned on a conference call, "When you see one cockroach, there are usually more." He also mentioned that First Brands is a similar risk case, and disclosed that there are several similar events in the market. However, market confidence has not completely collapsed. A survey released this week by Bank of America showed that investors remain relatively optimistic about high-yield and investment-grade bonds. BlackRock CEO Larry Fink also believes that despite the bankruptcies of First Brands and Tricolor, "the overall credit trend has not changed significantly." He pointed out that most private credit is similar to bank loans, and that failures will always exist, especially in poorly managed or improperly accounted companies. However, Brandywine Global investment analyst Tracy Chen takes a more cautious approach. She believes that although these bankruptcy cases may be seen as individual events of lax lending review, when combined, they may reflect increasing pressure on subprime borrowers, even though the overall economy remains stable. She advises investors to closely monitor four key indicators: private equity stock performance, regional bank stock trends, changes in high-yield bond spreads, and risk pricing in the automotive and credit card loan markets. "Currently, private equity stocks have significantly underperformed the market, regional bank stocks have slightly declined, while the other two indicators remain relatively stable," Chen pointed out, "But if all four areas deteriorate simultaneously, it means that localized pressure could evolve into systemic risk."