Credit spreads are still relatively wide compared to long-term averages and our expectations for further credit metric improvements.
Just as the credit market was starting to lose momentum, along came the tech sector.
But the story and headline risk out of Europe isn't over.
Credit spreads have been in flux as economic news swings from negative to positive.
Despite investors' efforts to push the markets higher, equity mutual funds, once again, experienced redemptions, while money continued to pour into fixed income.
Credit spreads for nonfinancial issuers (especially those in defensive sectors) held up better last week than financials, which widened significantly versus the rest of the market.
Pricing pressures have expanded from commodity-oriented products to segments that typically exhibit greater brand loyalty.
Greater access to short-term funding and additional liquidity among financial counterparties will be the true testament as to the validity and credibility of the stress tests.
The credibility (or lack thereof) of this week's results is the next major event that will affect the global credit markets.
Weaker-than-expected economic indicators in June led to widening corporate bond spreads, reflecting a dislocation in the markets.
While sovereign issues have slipped from the front page to the back of the newspaper, we continue to have worries about several issues.
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.
Tone remains cautious as investors weigh political and economic risks and dealers have been paring holdings.
How many sovereign defaults could occur before financial Armageddon?
The ongoing crisis in sovereign risk has highlighted the differences between investing in corporate and government bonds.