Credit Outlook: Spreads Still Have Room to Tighten
Credit spreads are still relatively wide compared to long-term averages and our expectations for further credit metric improvements.
David Sekera
Dave Sekera, CFA, is chief U.S. market strategist for Morningstar. Follow David on Twitter: @MstarMarkets. Please note, Dave does not use either WhatsApp or Telegram. Anyone claiming to be Dave on these apps is an impersonator. He will not contact anyone on these apps and will not provide any content or advice on either app.
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Just as the credit market was starting to lose momentum, along came the tech sector.
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But the story and headline risk out of Europe isn't over.
Wider One Week, Tighter the Next
Credit spreads have been in flux as economic news swings from negative to positive.
Bad News Is Good News Again
While the Grown-Ups Are Away, the Kids Will Play
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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.
Near-Term Deflationary Headwinds in Consumer Products
Pricing pressures have expanded from commodity-oriented products to segments that typically exhibit greater brand loyalty.
Take Cue From the Short-Term Funding Markets
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.
Will the European Bank Stress Test Stress the Market?
The credibility (or lack thereof) of this week's results is the next major event that will affect the global credit markets.
Credit Spreads Brace for Economic Mediocrity
Weaker-than-expected economic indicators in June led to widening corporate bond spreads, reflecting a dislocation in the markets.
European Risks Quietly Continue to Build
While sovereign issues have slipped from the front page to the back of the newspaper, we continue to have worries about several issues.
Finally Some Stabilization in the Credit Markets
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Volatility is Back in the Credit Markets
Credit Markets in the Eye of the Hurricane?
Tone remains cautious as investors weigh political and economic risks and dealers have been paring holdings.
Where to Draw the Line in Europe?
How many sovereign defaults could occur before financial Armageddon?
Balance Sheets of Developed Nations Reach Outer Limits
The ongoing crisis in sovereign risk has highlighted the differences between investing in corporate and government bonds.