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


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

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

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