The default rate of leveraged loans in the US has been continuously above 4% for 22 months, matching the record set during the 2008–2009 financial crisis, and this period is still ongoing. Historically, this phenomenon has only occurred during three periods: once during the financial crisis, once during the COVID-19 pandemic shock in 2020, and now the third time. Additionally, the first two instances both triggered recessions.

The most noteworthy point here is not the absolute level of the single-month default rate, but the prolonged duration of high default levels. This indicates that the current problem is not due to a one-time liquidity shock but rather a sustained squeeze on corporate cash flows and refinancing ability under a high-interest-rate environment.

Leveraged loans typically correspond to companies with lower credit quality and higher debt ratios, and are the most sensitive part of the entire credit system to interest rate changes. When the default rate of such assets remains high for an extended period, it often means that companies can no longer self-repair through operational improvements or refinancing, and can only passively deplete existing cash flows.

Unlike 2008, this round is not primarily under pressure from the banking system but is more concentrated in private equity, CLOs, and the non-bank credit system. The risk is not concentrated in a sudden outbreak but is released in a slower, more dispersed manner. This is also why macroeconomic data may still appear relatively stable on the surface, but credit pressures are continuously accumulating.

From a cyclical perspective, credit is always a leading indicator. When the leveraged loan default rate remains high for a long time, it usually indicates that corporate investment, mergers and acquisitions, and capital expenditures are being suppressed, which will gradually transmit to employment and consumption. Therefore, this chart does not mean the market has entered a recession, but rather signals that if the high-interest-rate environment persists, the probability of an economic downturn is increasing.

In plain language, if the Federal Reserve does not implement high-interest-rate adjustments, the probability of an economic downturn or even a recession will significantly rise.

Against this backdrop, the market’s pricing of risk assets will become more selective, and strategies that do not rely on direction but focus on cash flow and structural yields will be given higher weight. For example, the current AI boom is based on this logic—its popularity has led to higher sales, better financing, and a larger market.

However, relatively speaking, $BTC or cryptocurrencies are more dependent on liquidity, harder to generate cash flow, and more affected by liquidity and policy. Of course, I still believe that BTC and tech stocks are strongly correlated; otherwise, BTC’s price would have already halved, $BTC ##加密市场小幅回暖