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.