September's credit wipeout foretells even more pain in for US investors

The pain is just beginning for investors in US credit markets after Federal Reserve tightening and recession angst sent investment-grade bonds, high-yield debt and leveraged loans spiraling in September.

Losses may pile up further in October for low-grade bonds and loans as debtholders wrestle with an unrelenting Fed, mounting economic risk and market volatility. Debt across the spectrum suffered in September, with high-grade bonds falling 5.26% on a total return basis, the most since April, while a key gauge of US junk debt dropped 3.97% and posted losses for a third consecutive quarter, the longest quarterly losing streak since March