funds designed to give investors an easy way to trade in and out of us corporate debt are getting hit by selling on friday the biggest exchangetraded funds for us corporate debt were down sharply on friday heading for their worst daily fall in about a month after the may consumerprice index showed little hope of high costs of living easing in the us rents gas and food prices all pushed higher in may dashing hopes by many investors households and even the white house that efforts to cool inflation from a 40year high already might be helping shares of riskier highyield or “junk” bond etfs were down dramatically friday here’s an overview   the 129 billion ishares iboxx  high yield corporate bond etf hyg was off 16   the 81 billion spdr bloomberg high yield bond etf jnk was also down falling 17   for investmentgrade debt the 328 billion ishares iboxx  investment grade corporate bond etflqd was down 09   all three were on pace for the worst daily drops since may 5 according to dow jones market data   at the session lows jnk and hyg were headed for their worst daily drop since june 11 2020 etfs often are the first thing investors sell for liquidity when markets get choppy since their shares trade in a flash like stocks even though underlying bonds held by etfs can take hours days to longer trade “last year companies had tremendous pricing power” said ellen gaske lead economist at pgim fixed income by phone noting the glut of household savings that helped corporations pass on higher costs to consumers who often were competing for fewer goods due to supplychain disruptions but in the past few months “you can see cracks appearing” gaske said including as business profits adjust to workers with paychecks stretched from higher costs for gas groceries and more us companies like many households emerged from pandemic lockdowns in robust financial shape with heaps of spare cash lying around given ultralow interest rates and the huge amount of aid from washington and the federal reserve that’s now being reversed as household stimulus checks vanish and prices for nearly everything soar which has started to pressure quarterly corporate earnings related junk bonds are showing signs of liquidity strains as the sp 500 narrowly avoids bear market territory “for now inflation is the ‘singular mandate” of the fed and the ecb but over the next few months we would anticipate that the employment side of the fed’s mandate will reenter the considerationfunction as companies are increasingly freezing hiring with a number of them executing layoffs” said rick rieder blackrock’s chief investment officer of global fixed income on friday in emailed comments after the inflation report gaske at pgim however said emerging cracks in corporate credit likely will be offset by the overall strength of us households “there’s room for those cracks to appear and not to derail the economy” she said us stocks also were sharply lower friday with the sp 500 index spx off 25 the dow jones industrial average djia down 23 and the nasdaq composite index comp off 32 according to factset see why ray dalio’s bridgewater started betting against us and european corporate bonds also read these 19 big tech stocks have now dropped at least 60 from their 52week highs