Why cheap debt is still bullish for the stock market, according to Credit Suisse

0
54

2 + 2 still equals 4.

That’s the rough math behind a bullish case for stocks outlined by Credit Suisse’s Jonathan Golub, chief U.S. equity strategist, in a Monday client note.

To illustrate his point, Golub took the biggest BBB bracket of U.S. companies with investment-grade credit ratings and outlined why current 2.2% bond spreads, plus the roughly 2.1% yield on 10-year Treasury
TMUBMUSD10Y,
2.294%

rate, still make for a historically low 4.4% borrowing cost, (see chart) a positive for stock valuations.

Even at 4.4%, borrowing costs are pretty cheap for most big, public U.S. companies.


Credit Suisse

Read more…