Monday, March 23, 2015

Credit spread is increasing again

After a counter rally, the credit spread has been increasing again:

Credit spread and SP500
While the stocks made new highs last week on FED euphoria, the worsening credit spread signals newly arisen risk aversion. Granted, the divergence between the credit spread and SP500 has persisted longer than I expected but eventually the correlation will be established. For more about why credit spread matters, see "Why credit spread matters".



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