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Credit Insights

Credit Markets Steady Amid Other Chaos

Even with mixed economic indicators and volatility in the commodities market, we continue to believe that corporate credit spreads will tighten.

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Investors in the credit markets stepped aside last week and tried to make head or tail out of the extreme volatility in the commodities markets. The turmoil in commodities and foreign exchange was quite a show for those of us not involved in those markets. Over the course of the week, oil declined 14%, agricultural commodities slumped 7%, silver plummeted 27%, copper dropped 5%, and the euro fell 3%. The S&P 500 fell as much as 2.5% intraweek, but regained some ground Friday thanks to the strength in the jobs report and ended the week down 1.7%.

In all this chaos, the credit market was relatively steady as the Morningstar Corporate Bond Index was only off 1 basis point to +136 and credit spreads held their own and digested a relatively full plate of new issues.

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