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Global Credit Markets Have Proclaimed An End To The Recovery
by Jeffrey P. Snider • December 13, 2014
The amount of credit market fireworks this week is only surpassed by those of October 15. Everywhere you look, credit markets are not just growing bearish but, as I said earlier in the week, bearish in comparison with past crisis periods. The past few days have surpassed even that observation, making credit now a fast-moving indicator of still nothing good.
For most people that makes sense of Europe. The currency bloc that has been strangled by the common euro is living up to that sense of monetary reality. All that talk of recovery only eight months ago has been washed away in a tide of remarkable fear. What was perhaps only unease or mild nervousness as late as September has turned in the past few weeks to what can only be described as growing desperation.
Even the FOMC’s preferred measure of “market-based” inflation expectations, the 5-year/5-year forward implied rate, has dropped considerably and now faces the same kind of dreaded interpretations (as in not too enamored with the ridiculous idea of oil price = “stimulus”, but rather in complete agreement with oil price collapse = economic downdraft).
Given all this tandem information spread across vast geographical distance and trillions upon trillions of the largest credit and funding markets ever conceived, it is difficult to come to any interpretation other than the fact that credit markets have declared the recovery as being over, done; dead and buried. Maybe QE5 can entertain a revival, but given that QE3 & 4 are not so far in the past as to be irrelevant to this situation, it may not have that much positive effect next time. At that point a QE5 may only just confirm what credit markets already know, and what perhaps stock investors are starting to gain at least some introductory awareness
Global Credit Markets Have Proclaimed An End To The Recovery