Hartnett: Private Credit Trigger For Market "Flush" Now In Play

The latest Flow Show note by Michael Hartnett is a bit on the short side: almost as if the BofA strategist sensed there would be (literal) fireworks to distract from markets. And while he refrained from commenting on geopolitics, oil, regime change - after all, everyone else is suddenly an expert in all three - he did instead discuss two other key market moves in recent days: private credit and emerging markets.

Diving into the first one, where as we said last night "all hell has broken loose",  Hartnett reminds his clients that when bank loan funds "break bad", i.e., dip below their 200dma, "bad events" happen such as the yuan devaluation in 2015, COVID in 2020, and the UK pension crisis in 2022. It appears that private credit is either one of the best early indicators out there, or the catalyst that leads to broader market contagion.