Bund yield drop gives secondary market the jitters

A welcome period of serenity for the credit markets came to an end on August 10 when the US Federal Reserve announced it had cut its growth forecast for the year from 3.5% to 3%.

The Fed’s statement halted the strong rally that has taken place in credit since July. For some investors, the rally provided an opportunity to reduce risk, but for others the window to do that was all too brief. “Risky assets got hit, reflecting the weakness in macro data,” says a trader at a dealer in New York.

“The