DEVOTEES of old Westerns will recall the point at which one character inevitably says, “I don’t like it. It’s too quiet.” Cue the sudden death of a cast member as an arrow thuds into his chest.

The corporate bond markets are in a similar state at the moment. The default rate on bonds has dropped to 0.85%, the lowest level since 1981. But investors know that this is the calm before the storm. According to Stephen Dulake of JP Morgan, credit spreads have reached levels that point to default rates of 5-6%. The rating agencies are also predicting the default rate will rise to about that level.