The equity market correction over the past few weeks due to sovereign credit concerns on top of China policy tightening moves, mixed US economic data and a raised bar of earnings expectations has also gotten around to the credit markets over the past few weeks. Today, the investment grade CDS index is at 105 bps, up 4 from Friday and vs 84 bps two weeks ago. It was last at this level in late Nov in response to the news that Dubai was requesting a standstill agreement on their debt obligations. The KDP high yield index is rising to the highest level (in yield) since early Dec and is up about 60 bps in yield over the past three weeks.
