But corporate spending is still weak, and economists see a growing chance of a recession, according to a Bloomberg survey this month. Gains from lower interest costs may be offset by falling earnings. High-yield companies are facing downgrades at the fastest pace relative to upgrades since 2009, according to Bloomberg data.
Rising leverage levels may be signaling something important: companies themselves aren’t really performing better now, even if their securities are doing well, Morgan Stanley’s Patkar said in an interview.
“Maybe investors are being complacent about fundamentals also starting to improve,” Patkar said.
This story provided by Bloomberg News.