Calm before the storm? The credit markets are signaling issues in the equity markets. Credit always seems to move before equities because credit markets (i.e. bonds) are seen as less risk oriented. Well, quite simply, the chart above shows the credit markets for investment grade and high yield debt is beginning to diverge from equities. Keep an eye on your equity positions, we could be beginning to witness the beginning of a sharp correction in the equity market if the credit markets are a plausible signal.

Advertisements