For credit spreads to tighten further, we expect the market will require three things.
As earnings season dies down, the new issue market is picking up in earnest.
Low interest rates in and of themselves won't alleviate structural problems.
As investors focus on individual credit quality, they like what they see.
Portfolio managers of corporate bond funds have reportedly been inundated with new money and were desperately searching for bonds to put that cash to work.
Buyers seemed to outnumber sellers in the credit market last week, especially for short-dated bonds.
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Credit spreads are near their widest levels since the credit crisis as fundamentals continue to be overshadowed by Europe's efforts to contain the sovereign debt crisis.
The spread between the financial and industrial components of our corporate bond index recently returned to the peak levels.
The EU summit statement lacked any of the details or enforcement mechanisms that we wanted to see.
The longer-term trend for the corporate bond markets will depend on this week's European summit.
An increasing number of exogenous factors are affecting available capital.
Last week's jump in Italian bond prices did not appear emblematic of a typical market action.
While the initial bailout framework was enough to suppress near-term contagion fears, there continues to be enough smoke to indicate that potential fires are smoldering beneath the surface.
We find it disconcerting that the security that should benefit the most from the European plan has not appreciated along with the rest of the markets.
We are concerned that Wednesday's plan may be long on rhetoric but short in specifics.
We continue to be leery of how political risk and a possible slowdown in emerging markets will affect the marketplace.
We remain skeptical that the Europeans are close to being able to announce a decisive and comprehensive plan.
The markets were quick to give back rumor-fueled gains last week, but at currently heightened spreads, credit risk looks attractive from a fundamental viewpoint.
Credit spreads widen, but we don't see significantly higher credit risk.
Despite official denials, we've suspected for a while that policymakers have been working on a Plan B to allow Greece to fail while supporting the short-term funding markets.
Greek bonds are pricing in a near-term default, while French financials are in the hot seat.
With no major announcement from Bernanke on Friday, some arm-twisting might be needed before a consensus is reached in the Fed.
Last week's violent mood swings left investors trying to figure out what the real valuation of credit risk should be in this type of market environment.
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Despite decent reported earnings so far, the market's attention has been captured by the ongoing sagas in Brussels and Washington.
Volatility in the credit markets will continue for the foreseeable future.
Consumer defensive should perform admirably while our enthusiasm for the industrials sector has cooled.
U.S. inflation expectations seem to be under control, but sovereign credit quality abroad continues to decline.
Credit spreads will likely enter a narrow trading range over the next few months until the markets gain further clarity on the longer term.
The key to maintaining price stability isn't just observing and controlling current inflation, but rather observing and controlling the expectation of inflation.
The market has shown strength in the face of a voluminous amount of new issues and some disappointing economic indicators.
The draw of low interest rates combined with tight credit spreads keeps issuers coming back to the market for more.
Some new issues weakened in the secondary market last week.
Even with mixed economic indicators and volatility in the commodities market, we continue to believe that corporate credit spreads will tighten.
Investors took the Fed's recent statement as a green light to reach for yield as long as credit remains easy.
We expect S&P's recent action was only the first shot across the bow and there will be further warnings.
One of the dominant themes this year will be the focus on providing shareholder value, even if it comes at the detriment of bondholders.
Risky transactions in the corporate bond market are staging a comeback.
There is a voracious demand for bonds issued in Chinese currency in Hong Kong, and we suspect additional firms are evaluating, and will issue, renminbi-denominated bonds.
Despite numerous headwinds, we expect strong underlying fundamentals will continue to support further tightening in corporate credit spreads.
Credit spreads tightened last week, and the market easily absorbed an abundance of new issues.
The sell-off in the credit markets following the Japan crisis was fairly orderly last week.
The timing of the PIMCO manager's move out of Treasuries so many months before the Fed is scheduled to end its bond purchase program strikes us as odd.
The corporate bond market continued to be a beneficiary of the sell-off in the municipal bond market, but this trend could end soon.
Aside from Illinois' new issue, there were encouraging signs last week in the new issue market for traditional municipal bonds.
A number of technical factors in the municipal bond market have magnified the selling pressure.