Record Credit Hedging Signals Rising Market Anxiety

[kevin1]

Credit ETF Hedge Put Open Interest Reaches New Highs. Source: X/The Kobeissi Letter

Investors are rapidly increasing downside protection in US credit markets, pushing put option open interest across major bond ETFs to a record 11.5 million contracts. According to The Kobeissi Letter, this includes heavy positioning in the iShares iBoxx $ High Yield Corporate Bond ETF, SPDR Bloomberg High Yield Bond ETF, iShares iBoxx $ Investment Grade Corporate Bond ETF and Invesco Senior Loan ETF. Total outstanding contracts have doubled in the past year, surpassing levels seen during the 2022 bear market.

At the same time, credit spreads are widening. Tech high-yield spreads have climbed to 556 basis points — the highest since October 2023 — while broader junk bond spreads sit at 361 basis points. In Europe, the iTRAXX Europe Crossover has jumped sharply, signaling growing concern globally. The surge in hedging activity suggests institutional investors are bracing for deeper stress in corporate debt markets.

[cryptobro]

record put open interest in credit etfs and crypto sitting there like hmm should i care