The forward economic picture seems to be improving. JPM just upped their Q2 estimate for GDP to -.5% (up from -2%) with Q3 positive at 1%. Bernanke highlighted areas of economic strength during his talk yesterday.
The technical demand picture remains very clear and strong. Yesterday, Teck issued ~$4B in the high yield space; those bonds are up $5 since yesterday. On the investment grade side, Xerox, Husky Oil, DTE Energy and Canadian Oil Sands are all in the market with new issues. With 75% of the S&P 500 having reported, expect this pace to pick up very soon.
Historically, liquidity in REIT debt has been terrible; this was true long before the real estate bubble burst. Treasurers at these companies are now realizing that they can buy back their debt very cheaply making these bonds even less liquid (remember, liquidity must be viewed symmetrically). This could give their equity a boost as the balance sheet strengthens.
There is an interesting civil case before the court in NYC. The SEC is charging some folks with insider trading; this is notable as it is the first time CDS was the instrument being used. The defendants lawyers argue the SEC does not have jurisdiction. Clearly, the regulators are making this an area of focus. You'll note that the NY Fed has recently been talking about trying to break the dealers' stranglehold the CDS market.
Take a look at these current and historical spreads by sector (from JPM) and you'll see that credit has actually underperformed (click on the graphic once to enlarge it):
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