Rumblings of discontent are beginning to be felt in the U.S. bond market as many of the factors which contributed to the bullishness in prior years -— such as low inflation, surging corporate profitability and an accommodative monetary policy — are now poised to worsen from previous levels, warns Standard & Poor’s Ratings Services warns in a new report.

“Continued volatility in the bond market could create pressure points for distressed credits that have substantially benefited from benign financing conditions,” cautions head of Standard & Poor’s global fixed income research group Diane Vazza.

“A rising distressed ratio would signal increased urgent need for capital by those most in need and potentially act as a precursor to higher defaults, if accompanied by a credit crunch,” Vazza adds.

The rating agency notes that over the long term movements in the distressed ratio correspond well with trends in the speculative-grade default rate, with a peak in the distressed ratio generally signaling a peak in default rates a year later.