Global financial jitters about what are referred to as non-bank banks or private credit.

Despite wholesale inflation coming in hot this morning, investors are still buying U.S. government bonds this morning.

The benchmark 10-year interest rate is now below 4%.

But analysts say it's a move toward a safe haven.

But why now? Christopher Lowe is

chief economist at FHN Financial in New York. Hey, Chris. Hey, David. So, U.S. government bonds,

people are buying those because they're worried about something else. The something else is coming

out of London. What is it? It's private credit. It's specifically MFS, which is a big lender,

making risky loans, the kind of loans that banks don't want to make. And they do it by borrowing from

investors and from banks and securing capital, which they then pledge as collateral.

They've been accused of double counting collateral. And as a result, the banks have pulled funding,

and MFS is in the British equivalency of bankruptcy this morning.

All right. We'll see if those accusations are borne out. But we do see evidence. There are published

reports that some of the banks that are creditors are exposed to some of these losses. This sounds

familiar to that auto subprime lender

tricolor that ran into trouble late last year. That's right. And people are starting to think

it might be a bigger pattern. And so what we're seeing in the broad market today,

Treasury's lower in yield, that's people

fleeing to quality, and high yield debt, what we affectionately know is junk bonds.

Those yields are rising.

When junk spreads rise, it's a signal to the entire industry, credit industry, that lenders are nervous and pulling back from what they perceive as the most risky parts of the credit markets.

All right.

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