Skip to Content
Credit Insights

Finally Some Stabilization in the Credit Markets

Issuers will probably look to use recent stability to price bonds before the new issue market begins to slow later this month in anticipation of the July 4 holiday.

The Morningstar Corporate Bond Index widened 5 basis points to +190 at the beginning of last week, with the market stabilizing Thursday and Friday. The stabilization was a result of improving risk appetite in the equity markets, as the S&P 500 rose 25 points to 1,092, with the greatest increase occurring Thursday.

Equity risk appetite returned because of an in-line initial jobless claims figure reported Thursday and better-than-expected consumer confidence reported Friday. The equity markets shrugged off Friday's report that retail sales declined 1.2% in May from April. We aren't reading too much into the weekly initial jobless claims reports for the next few months. As the temporary census workers complete their assignments, claims may drift upward. We are also unsure of how the oil spill may affect the Gulf states; this could also put upward pressure on initial jobless claims.