C.M.O. 2.25.2009
Credit Market Overview
February 25 2009
It was good to have things back to normal yesterday. Consumer Confidence, projected at a lofty 35 came in just 10 points below at 25; S&P cut Latvia’s credit rating to BB+ putting it in “Junk” land and the S&P saw all of the good news in those events and rallied 29.81 points.
CDS spreads which have been following the stock market as of late vs. made a move as well with the High-Yield index closing at 1477.2 in New York down 68.7bps or 4.44% from Monday night’s close which was through the February 5th close of 1494.4, it’s most recent high.
Investment grade spreads turned down as well but not nearly as dramatically as those on the other side of the investability tracks. At 215.5bps IG spreads are still above the “200” line but in this latest sprint they did not get above the 222.1 level seen on the 23rd of December last year.
Looking at a chart of the levels one could almost make the case for lower highs which the technicians out there know is at least half of the equation for a down trend. The other half is lower lows but we will have to get through 187.6bps, which occurred on February 9th for the second piece of the puzzle to fall into place.
It has been a rare occurrence as of late to have the markets respond positively when the cameras are pointed at anything in D.C. but the first day of Ben Bernanke’s semi-annual testimony in front of the Committee on Banking, Housing and Urban Affairs seems to have broken that trend as well. Chairman Dodd was down right obsequious when addressing the Chairman of the Federal Reserve and others on the panel acted as if they were wearing those white gloves workers in museums don when handling a work of fine art.
Sen. Bob Corker (R. Tenn) was the only one in attendance that was having a hard time understanding, in his dumb like a fox sort of way, how stress testing the banks and then giving them whatever they needed to pass the test was not ipso facto “Nationalization”.
Ben kept his cool and explained that to the extent there was still a stock price to be quoted, something which can’t be said for a handful of other institutions that were around this time last year, then the bank in question had not been nationalized.
I do find it amazing how smart you have to be to say really dumb things.
Enjoy the week.
Jim Delaney
February 25 2009
It was good to have things back to normal yesterday. Consumer Confidence, projected at a lofty 35 came in just 10 points below at 25; S&P cut Latvia’s credit rating to BB+ putting it in “Junk” land and the S&P saw all of the good news in those events and rallied 29.81 points.
CDS spreads which have been following the stock market as of late vs. made a move as well with the High-Yield index closing at 1477.2 in New York down 68.7bps or 4.44% from Monday night’s close which was through the February 5th close of 1494.4, it’s most recent high.
Investment grade spreads turned down as well but not nearly as dramatically as those on the other side of the investability tracks. At 215.5bps IG spreads are still above the “200” line but in this latest sprint they did not get above the 222.1 level seen on the 23rd of December last year.
Looking at a chart of the levels one could almost make the case for lower highs which the technicians out there know is at least half of the equation for a down trend. The other half is lower lows but we will have to get through 187.6bps, which occurred on February 9th for the second piece of the puzzle to fall into place.
It has been a rare occurrence as of late to have the markets respond positively when the cameras are pointed at anything in D.C. but the first day of Ben Bernanke’s semi-annual testimony in front of the Committee on Banking, Housing and Urban Affairs seems to have broken that trend as well. Chairman Dodd was down right obsequious when addressing the Chairman of the Federal Reserve and others on the panel acted as if they were wearing those white gloves workers in museums don when handling a work of fine art.
Sen. Bob Corker (R. Tenn) was the only one in attendance that was having a hard time understanding, in his dumb like a fox sort of way, how stress testing the banks and then giving them whatever they needed to pass the test was not ipso facto “Nationalization”.
Ben kept his cool and explained that to the extent there was still a stock price to be quoted, something which can’t be said for a handful of other institutions that were around this time last year, then the bank in question had not been nationalized.
I do find it amazing how smart you have to be to say really dumb things.
Enjoy the week.
Jim Delaney
Labels: CDS, correlation, credit, equity
posted by Jim Delaney at
4:35 AM
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