(Dec 6): High-grade US corporate bond spreads hover near their tightest levels in more than 25 years and may grind even lower next year. Charles Schwab Corp’s Kathy Jones sees cause for concern.

“There is a sense now of real complacency that’s priced into the market,” the chief fixed income strategist at Schwab Center for Financial Research said at the 9th annual Bloomberg Intelligence credit conference on Thursday. “It’s priced as if nothing will ever go wrong.”

While Jones isn’t predicting “any disaster” for investment-grade debt, she worries that investors are “on this sort of smooth glide” despite potential disruptions that include incoming President Donald Trump’s policy proposals and the Federal Reserve’s interest rate trajectory.

“Is it too good to be true that nothing can go wrong this year?” she asked. “It’s not a bad time to kind of take a step back and make sure you know what’s going on around you.”

Another panelist at the conference, Meghan Graper, global head of debt capital markets at Barclays plc, questioned whether markets will face a source of volatility seen in Trump’s first term as president. She wondered whether Trump’s tweets on X would start moving asset prices again, which could lead investors to seek “insulatory premiums” and cause debt to be more expensive.

“If you were to be a borrower in the market with a deal, it can prove to be problematic,” said Graper.

Still, she noted that Barclays expects a booming US$1.65 trillion (RM7.3 trillion) of high-grade issuance next year.

Uploaded by Siow Chen Ming