Spreads: where next?

credit of the month

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Throughout 2004, corporate bond spreads have seemed at a loss on which direction to take. Despite a booming US economy—in the first quarter of this year, GDP grew at 4.4% on an annualized rate—and considerably stronger credit fundamentals than in the first half of 2003, the markets have not continued the tightening that characterized 2003.

This may be because interest rates are certainly set to rise: this month’s news that the consumer price index edged up by 0.6%, three times what was expected

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