2015-09-28wsj.com

The U.S. corporate-bond market is starting to flash caution signals about the broader economy. The difference in yield, called the "spread," between bonds from America's strongest companies and ultrasafe U.S. Treasury securities has been steadily increasing, a trend that in the past has foreshadowed economic problems

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Investors and analysts say they are closely watching the action to determine whether trouble is brewing once again. Concerns are growing about companies' ability to pay back the massive debt load taken on in recent years, as ultralow interest rates spurred corporate finance chiefs to sell record amounts of bonds.

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The bigger spreads suggest the credit cycle--which measures companies' ability to borrow for debt refinancing, capital expenditures and other spending--is in its later stages, though many investors say they don't think its end is on the immediate horizon. Typically when a cycle ends, some companies can't refinance their debt and defaults increase, a sign that the economy is slowing.



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