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Credit Insights

Sovereign Concerns Continue to Spill Into the U.S. Credit Markets

Despite decent reported earnings so far, the market's attention has been captured by the ongoing sagas in Brussels and Washington.

Credit spreads continued to leak wider last week as the Morningstar Corporate Bond Index rose 5 basis points to +157. The financial sector took the brunt of the pain, widening 7 basis points.

Even though reported earnings were generally in line to better than expected last week, the market's attention has been captured by the ongoing sagas in Brussels and Washington. The headlines out of Europe seem to indicate that European bureaucrats are getting closer to resolving the Greek credit crisis by requiring private bondholders to take losses. Closer to home, neither political party appears ready to blink as they try to negotiate a plan that will resolve the debt ceiling.