The credit implosion

The negativity surrounding credit markets is beginning to change but is the rally sustainable?

It has been a long two years for the credit markets since they began imploding. The implosion led to spreads that had last been seen in the Great Depression. The widespread negativity surrounding credit markets, however, started to change in March as macro-economic leading indicators started to improve and selective companies, particularly US and European banks, began to beat expectations. For markets to continue to deteriorate in March 2009, the news needed to be worse than expected but this was not the case. This fed into the significant rally that saw the iTraxx XO Index tighten from 9...