Monday, May 18, 2009

Fixed Income's Sharp Reversal

A massive reversal in the fixed income market with the high yield index up a WHOPPING 20%+ year to date.

What's so amazing is how fast the reversal has taken place considering most of the underperformance in the credit market didn't really occur until September 2008.

And now... the sell-off and rebound which was technical in nature (i.e. forced selling / opportunistic buying), now becomes a question as to the fundamental value of the security.

Source: Barclays Capital

1 comment:

  1. State Street is offering some stock/debt up today, but they also made it known that they had decided to take some conduits back onto their balance sheet. After reading the associated SEC filings, I couldn't find any explanation as to why they decided to do that now. Makes you wonder why they would decide to reload and writedown/recognize some pretty heavily underwater assets in the midst of a rebound...