Investors are pulling out of high-priced corporate credit, anticipating a correction due to signs of slowing economic growth that could impact stocks. Credit pricing reflects a stronger economic outlook than official forecasts predict. Spread measuring corporate bond interest over government debt is at a 1998 low. Global asset managers are cautious.

As U.S. economic data softens, corporate credit is vulnerable to a slowdown that could affect global growth. Markets are rallying, but credit markets show signs of exuberance. Derivatives are being used to bet against high-yield bonds. A shift in credit pricing indicates possible downside to equity markets in the next three months.

A popular exchange-traded fund tracking high-grade corporate credit fell before world stocks in previous economic downturns. Asset managers are hedging credit risk, predicting potential equity market declines. Credit markets are leading the way in market indications, with spreads narrowing abruptly in some business bonds.

High-yield debt, dominated by economically important industries, may face a correction affecting stock markets. Refinancing costs and defaults could increase, sparking concern about jobs, investment, and growth. Credit markets under pressure often lead to equity market pressure. Pricing in credit markets suggests high growth forecasts, not in line with current economic conditions.

Credit spreads imply almost 5% global growth, above current levels. The IMF forecasts 3% global growth this year. Investment-grade markets are pricing in a Goldilocks scenario, which may not be accurate. 40% odds of the U.S. entering a recession, with risks for other major economies. Many risk assets are pricing in higher growth than expected, with credit markets as outliers.

Read more at Yahoo Finance: Debt market jitters signal caution for high-flying stocks