Analysis-US corporate debt euphoria could stall as Fed tightens liquidity

Seemingly endless demand for U.S. top-rated corporate debt has created unease among some investors who think a selloff could be on the cards if liquidity conditions worsen later this year. Expectations of a benign outcome for the U.S. economy despite high interest rates have fuelled a search for yields and supported demand for credit. Yet some in the market suspect optimism around the asset class could make it vulnerable to a repricing once the Federal Reserve’s efforts to tighten financial conditions start biting into bank reserves left so far unscathed because of excess liquidity in the financial sector.