The effect on the reversal of U.S. interest rates and credit spreads could be devastating.
Credit spreads remain very narrow, which may indicate a focus on near-term growth and plentiful liquidity.
Banks, Wilby says, are going to benefit from the widening of corporate-credit spreads.
As liquidity gradually declines, we expect wider credit spreads, weak commodity prices and a moderately stronger dollar.
Despite wider credit spreads relative to Treasuries, we note the relatively low interest rates in most credit markets.
And the credit spreads, we start to see those blow out, then we will get extremely more cautious.
We expect credit spreads to respond to economic growth, widening later in the year if a slowdown comes into view.
Every day, we read reports of escalating credit spreads on Greek sovereign debt, and CDS prices rising dramatically on exchanges.
The lack of liquidity, widening credit spreads and enormous disparities in market prices of securities have created some terrific bargains.
Though Bermudez admits that credit spreads have widened a bit, he maintains that the small-business lending market has been relatively stable.
The combination of low Treasury yields and nugatory credit spreads provides an irresistible opportunity for emerging countries to issue lots of cheap debt.
Credit spreads tightened considerably over the five-year period and active managers were not able to keep up with these actions in the high-yield marketplace.
Capital markets firms are confronting evolving challenges, such as more fragile funding conditions, wider credit spreads, increased regulatory burdens and more difficult operating conditions.
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For one thing, given how low government-bond yields and corporate credit spreads have fallen, the time of plenty in the bond market may have passed.
Equity strategists at Salomon Smith Barney point out that, in the past, tightening credit spreads have been a reliable leading indicator of rising share prices.
Higher long-term interest rates or credit spreads would also be awkward.
This increasing risk aversion amplifies an initial price decline -- coming from bad earnings news or the huge rise in credit spreads -- into a rout.
When things go wrong, everyone tries to hit the exits at the same time and the simultaneous large increases in credit spreads accentuate the banking crisis.
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But with yields on ten-year Treasurys stuck near a skimpy 4.2% and credit spreads tight compared with historic norms, this has not been a happy time for fixed incomes.
The credit spread simply measures how much more high yield bonds yield than treasuries of similar maturities (read more on the basics of credit spreads here).
U.S. credit spreads barely widened, a sign of market stability.
The financial crisis has led to such a widening of credit spreads and tightening of credit standards that aggressive monetary policy easing has not been enough to contain the crisis.
Nonetheless, widening credit spreads and canceled debt offerings are not the types of things we want when the economy is trying to recover from a recession caused by a financial crisis.
All these steps were aimed at reducing credit spreads on private loans and increasing the supply of private credit, currently constrained by fear of counterparty default, illiquidity and banks' depleted capital.
We continue to overweight markets where credit spreads (sovereign yield spreads or CDS spreads) have declined relative to their two-year averages and where valuation ratios are cheap, including Germany, Austria, Italy, Portugal, and France.
Given currently elevated equity valuations, widening credit spreads, deteriorating market internals, and the rapidly increasing risk of fresh economic weakness, there is little in the current data to rule out these extended time frames.
This has been brought home many times in recent years, from the bond-market crash in 1994, to the turmoil in financial markets sparked by Russia's default last year, to the dramatic widening of credit spreads in America this year.
Despite the recent weak readings, we expect business investment in equipment and software to grow at a moderate pace this year, supported by high rates of profitability, strong business balance sheets, relatively low interest rates and credit spreads, and continued expansion of output and sales.
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