Daily Commentary

Yesterday, credit spreads rallied in the face of a weaker equity market. Today, that euphoria has subsided as spreads are slightly weaker.

GM headlines are rolling across the screen as we speak. GM long bonds were up ~$2 on the day to ~$8.50 (mid).

JPMorgan's most recent credit strategy piece points out that for the non-financial sector, most key credit ratios are far better than the recession of 2002...yet spreads are substantially wider.

Einhorn, the king of taking a position and then talking about it, has chosen a new target (pun intended) of Moody's. I suspect the mood there (pun intended again) is pretty grim after one of their owners, Warren Buffett, stated "we don't believe the people at Moody's...should be telling us the credit rating of a company."

Secondary volume was very heavy yesterday in addition to the $3.65B in new issuance. The dealer sale vs dealer buy ratio remains ensconsed at ~3x.

TRV, CBS and MS are all marketing new issues today.

I think most folks were surprised at how high the WaMu credit card deliquency rate of 18-24% that Jamie Dimon recently mentioned. However, it doesn't seem to have hit/hurt the credit card ABS market broadly.

The blog Calculated Risk has an interesting graph that shows how actual home sales are closely tracking the 'adverse case' scenario under the bank stress test.

As a former true believer, but now a conflicted believer in free markets, I'm not stunned to see some reticence about participating in some of the bailout programs.