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Credit Insights

Positive Momentum Carries Credit Tighter

But the story and headline risk out of Europe isn't over.


The U.S. credit market continued its positive momentum last week, as the Morningstar Corporate Bond Index tightened 4 basis points to +164. Credit spreads in Europe widened at the start of the week after The Wall Street Journal ran an article casting doubt on the veracity of the European bank stress test results. For Morningstar's original take on the deficiencies of the stress test results, please see our July 26 commentary.

Credit default swap spreads for Ireland continued to widen, moving 50 basis points to another new high of +380. On Wednesday, the Irish government announced its intention to split Anglo Irish Bank into a good bank/bad bank structure. The government was reportedly forced into this decision by material outflows (a run on the bank).

David Sekera does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.