Cash bonds and CDS diverge

cash versus CDS

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The movement in cash markets in March led some observers to predict that credit markets are finally on the turn. Headlines such as “End of the party” and “Growing fears credit boom may implode” in the financial press suggested that the two-year bull run of credit may have come to a sudden end. Euro-denominated bonds widened by about three basis points in the week beginning March 7, with sterling spreads moving out by between five and 10 basis points.

A rapid rise in US Treasury yields

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