SourceCrashnsanetrilogyswitchGold ten data

The number of corporate bankruptcies has increased in recent months amid shaky confidence that interest rates will fall quickly.

April was the month with the highest number of corporate bankruptcies in nearly a year, with 66 companies filing for bankruptcy, up 88 per cent from 35 filings in January, according to S & P global data.

The expectation that the Fed could cut the federal funds rate as soon as possible has been questioned, which is one of the reasons so many companies have filed for bankruptcy. The Fed's federal funds rate has remained at 5% since July last year.Crashnsanetrilogyswitch.25% Mutual 5CrashnsanetrilogyswitchBetween. 50%. Despite high hopes from the start of 2024 that the Fed would start easing as early as March, strong economic and inflation data have since postponed that expectation to December.

S & P said that for many companies burdened with high interest rates, this meant "surrender". After all, the Fed's hawkish policies were the main reason for the deterioration of the balance sheets of most companies last year, and the survival of these companies depended on lower borrowing costs.

By one measure, when the market expected the Fed to cut interest rates soon in early 2024, the rate of rise in corporate costs did slow. The effective yield on junk-rated corporate bonds fell to 7.40% in march, according to one index. But stubborn inflation last month made it unlikely that the Fed would cut interest rates soon, and the yield then soared to 8.11 per cent.

The top three sectors that went bankrupt that month were consumer discretionary, health care and industry, according to S & P Global.

Although the April non-farm payrolls report was weaker than expected and concerns about stagflation have receded, Fed officials continue to hint that inflation needs to slow further before interest rates are cut.

But some analysts warn that the longer the Fed stays "on hold", the greater the risk of economic problems. Frances Donald, chief economist of Manulife Investment Management, said in AprilCrashnsanetrilogyswitch:

"now that we have returned to an environment where we have lost potential interest rate cuts, we actually have to increase the likelihood of bad things happening."