
Credit markets falter as dealers slash inventory
Net negative sell-side bond positions exacerbate price gapping and settlement failure

Dealer corporate bond inventories have fallen to new lows in recent weeks, breaking their usual relationship with investor flows and exacerbating wild swings and settlement misfires in credit markets, traders say.
Primary dealers’ combined holdings of investment-grade and high-yield bonds tumbled into negative territory in July, hitting a low of -$2.17 billion for the week ending July 13, when dealers held net positions to sell bonds across both classes, data from the Federal Reserve Bank of
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