Viresh Kanabar
Earlier this week, we highlighted stock market internals showing significant strength despite weaker labour market data. This is at odds with previous spells of weakness like 2018 or 2024. The credit market paints a similar picture. IG CDX at 47bps sits near all-time tights—first percentile since 2011. The HY market is equally complacent, with spreads […]
John Tierney
Summary The recent New York Community Bank (NYCB) blowup has brought renewed focus on bank exposure to commercial real estate (CRE). It is a potential problem – banks hold about 50% of CRE debt. Fortunately, the risk is distributed across some 5,000+ mostly small banks that serve local markets. More bank failures and mergers are […]
John Tierney
Credit spreads have trended tighter in recent weeks, despite some high-profile defaults and downgrades of regional banks by Moody’s. Bottomline, these events have been in market prices for months.
John Tierney
Credit spreads tightened significantly over the past month as equities continued to rally and the VIX index of equity volatility traded at post-pandemic lows.
John Tierney
Investment grade and high yield corporate bond spreads are trading in a narrow range, in line with equity volatility.
Dominique Dwor-Frecaut
As is typical of most recoveries, the credit impulse is currently negative, suggesting a bank credit crunch may impact growth little.
Sam van de Schootbrugge
A new National Bureau of Economic Research (NBER) working paper, co-authored by researchers from Stanford and Columbia, analyses the US banking system’s exposure to rising interest rates.
John Tierney
Summary Pundits are again tilting at the frothy high yield credit market, saying spreads are too tight given rising rates and recession risks. They miss obvious fundamental reasons why credit spreads remain tight – default rates are low, and corporate balance sheets are in great shape.
John Tierney
Corporate bonds spreads will widen significantly if, as we anticipate, persistent inflation leads to higher rates and a recession later this year.
Richard Jones
The concept of the business cycle has always fascinated me. And I have always thought understanding it is important for improving investment and trading decisions.
Bilal Hafeez
In this report, we standardise price changes across different markets to allow for cross-market comparisons. US 2-year yields saw a...
Bilal Hafeez
US bond yields saw a 3+ standard-deviation jump last week, while tech stocks got smashed with NASDAQ seeing a 1.9 standard deviation...
Bilal Hafeez
Last week saw big positive moves. Apply share prices saw a 3+ standard-deviation weekly jump. The overall S&P500, US high yield credit...
John Tierney
Another year, another Congress, another debt ceiling crisis. Usually, these things get resolved after tense negotiations and...
Sam van de Schootbrugge
A review of the financial crisis literature finds crises characterised by excessive household debt have significantly worse medium-term...
John Tierney
To capture interest income or carry in a low-yield environment, we favour high-yield corporate bonds. We can get exposure to the broad...
Sam van de Schootbrugge
A raft of prudential regulations sprung up to protect financial stability in the aftermath of the 2008 Global Financial Crisis. Yet at the onset...
John Tierney
Investment-grade and high-yield credit spreads are on the cusp of post-GFC tights. Many worry that rising inflation will push...
John Tierney
Amid the volatility and uncertainty sparked by a jump in the 10-year Treasury yield, equities and corporate credit markets hit...
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