With the S&P 500 index close to record highs and U.S. Treasury yields near record lows, world markets increasingly resemble the ball-on-top-of-a-hill diagram used to illustrate an unstable state in popular science books. Roll to the left for a cataclysmic stock market collapse; roll right for resurgent global growth, soaring equity prices and a crash in bonds.
The view down the hill is shaped by two alarming facts:
One: Investment-grade companies mostly go under when interest rates are on the floor.
“If you go back 200 years,” said Thomas Thygesen, head of cross asset strategy at Skandinaviska Enskilda Banken, in Stockholm, “you’ll find all the big banking crises, all the waves of companies that go belly-up because they have too much d…
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