MW Corporate bank bond-buyers wade in, even as stocks get clobbered

By Steve Gelsi

Capital flows into Bank of America's debt after investors moved away in recent days, as equity prices swoon

Jitters around a recession were hitting bank stocks harder than most other sectors on Tuesday, even as corporate bonds issued by the country's largest financial firms drew in buyers.

With stocks moving lower as Wall Street faces the official start of trade tariffs by the Trump administration, $Citigroup Inc(C-N)$.'s stock (C) and $Bank of America Corp(BAC-N)$.'s stock $(BAC.SI)$ both fell about 5%.

Goldman Sachs Group Inc. $(GS)$ fell about 3% and JPMorgan Chase & Co. $(JPM)$ fell about 3%. Wells Fargo & Co. $(WFC)$ dropped about 4% and Morgan Stanley $(MS)$ fell about 4%.

At the same time, money is moving into corporate debt issued by banks on Monday and Tuesday.

The activity in the bond market comes after money flowed out of banking debt in the last two weeks of February, as spreads widened.

Bond spreads have started to flatten in recent days after widening in February,

Bank of America and Citigroup's spreads remain wider than their peers, in a sign that investors view their debt as more risky than others.

Bond spreads widen when investors believe they deserve more compensation for the risk of taking on corporate debt, and tighten when they see more positive prospects.

If inflation rises more steeply because of tariffs and other policy changes, economic activity could slow down and impact banks' bottom lines.

Truist analyst David Smith said last week that an expected flurry of activity in 2025 has yet to materialize for banks.

-Steve Gelsi

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March 04, 2025 15:40 ET (20:40 GMT)

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