A New Sign of Fear for U.S. Drillers

For U.S. drillers, the dreaded correlation between stocks and bonds is back. Earlier this year, while equity investors were killing them, the companies could bask in the warm glow of bondholders’ confidence. Then the U.S. price of oil tumbled below $50 a barrel and kept sinking. Natural gas took a dive, too. That’s when the warm glow turned cold. Energy junk bonds have been hit especially hard. They slipped more than 2 percent in June, according to a Bloomberg index, after increasing 38 percent in 2016 — a year when 89 energy companies filed for bankruptcy. Meanwhile, the S&P 500 Energy Sector Index has slumped 16 percent since Jan. 3, while the S&P 500 is up nearly 8 percent in the same period.

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Source: Bloomberg

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