Weekly Signal & Noise Filter

The State of the Trade

There are two sets of vertical waterfalls that have massive implications for the forward pricing of all financial assets.

• A collapse in real yields

• A collapse in credit spreads

Real yields had a waterfall moment last week.  Down 18bps in one day, if one wants to be precise.  Or bonkers.

This development more than any other has knock-on effects across the entire universe of risk assets.

Have a look at credit spreads.

• Credit spreads across the ratings spectrum are now below their 2021 – 2023 averages.

• Credit spreads are at levels not seen since 2021.