Credit Spreads Collapse To Post-Crisis Lows As Stock Market 'Greed' Nears 1998 Highs

"I want it all... and I want it now...!!!"


Credit spreads have collapsed in recent weeks - back to post-crisis lows...

As Stone-McCarthy writes, the Investment Grade Markit CDX North American Index was 54.2 basis points yesterday, just down from 54.6 basis points on Monday, and it is trading at 54.8 basis points so far this morning. Yesterday's reading was the lowest reading for the index, which dates back to September 2011. The High Yield CDX Index was 320.1 basis points yesterday, down from 322.3 basis points on Monday, and it is trading at 321.8 basis points so far this morning. Yesterday's close was the lowest since August.

Additionally, The BoA/ML Corporate Master Index OAS fell to just 105 basis points from 106 basis points on Monday. That's the lowest it's been in more than ten years, since July 19, 2007. We don't yet have the High Yield Master II Index OAS for yesterday, but it was 355 basis points yesterday, down from 356 basis points on Monday. That matches the low from late July, which is the lowest it's been since July 9, 2014.


All of which makes zero sense as leverage has never been higher...


But then again, market 'greed' has almost never been higher...

CNN's Fear & Greed index soared to 96  - tied for the 2nd highest reading since 1998...

Ironically, as credit spreads on massively-levered corporate bonds hit post-crisis-lows, Puerto Rico bonds are collapsing...

Behold the bloodbath in Puerto Rico GOs after Trump's "wipe 'em out" comments...


And before we get to the broader markets, today's epic 5 sigma beat in ISM Services (which makes all the sense in the world), spiked 'soft' data back to 6-month highs (as hard data hovers around 8 year lows). This is the biggest gap between hard and soft data (lower panel) ever...

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In a shocking moment of truth for many investors, Small Cap stocks ended the day lower (unable to ramp like yesterday) but S&P, Dow, and Nasdaq held on to gains... (as Trannies underperformed)

For context, today's 0.25% drop in Russell 2000 is the worst drop in over a month.

Russell 2000 and its 'VIX' remain notably decoupled...


FANG Stocks were panic-bid at the open, but faded for the rest of the day again...


Interestingly, 'high-tax' names underperformed today (back below the Trump Tax Plan levels)...


Bank stocks underperformed and recoupled with the post-FOMC flatter yield curve...


Treasury yields ended the day unchanged, continuing the trend of extremely narrow ranges... different regime today overenight but the post ISM move was same as usual - bond buying after Europe closes...


The Dollar Index fell for the 2nd day in a row (with China on Golden Week Holiday). The big flush hit as Asia opened and Fed 'shortlist' headlines hit... The dollar rallied since around 8amET (and spiked around the 10amET ISM data


Gold gained modestly on the day, but notably was sold once US woke up. Bitcoin ended lower for the 2nd day in a row, decoupling lower as Asia closed...


While WTI and RBOB levitated off overnight lows (post-API) and snapped higher on DOE data, they closed mixed with oil down back below $50 (despite a big draw) and gasoline up (despite a big build)


Finally, as a reminder, so far this year, the S&P’s maximum continuous sell-off (continuous daily declines) has been less than 2%. If this holds until year-end, then 2018 would be seeing the smallest such loss for the S&P for almost 100yrs (Bloomberg data starts at 1928).

Is it any wonder why so few investors seem to be concerned about traditional macro risks at present – in particular, an equity market correction.


tropicthunder Wed, 10/04/2017 - 16:04 Permalink

"Gold gained modestly on the day, but notably was sold once US woke up"What else is new. Gold getting the beat down at the London PM Fix is a Shyster badge of honor..

Seasmoke Wed, 10/04/2017 - 16:14 Permalink

Although the fucking criminals can hammer paper Gold price $10 any time they want. It used to be $20 anytime they wanted. So looks like they are getting weaker. We just need To Hang in there !!!

Ron_Mexico Seasmoke Wed, 10/04/2017 - 17:18 Permalink

yah, sure, I used to believe that crap about stocks take the stairs up and the elevator down. But now I see that gold takes the handicapped ramp in a walker up and falls down the elevator shaft to go down.  Stocks, OTOH, take the jetway to a big shiny jet, then launch into the stratosphere while PMs lie helpless in a pool of dog urine.

In reply to by Seasmoke

D.r. Funk Wed, 10/04/2017 - 16:14 Permalink

The fuckers couldn't even get 20 dow. Wouldn't be stunned at another manufactured surge tomorrow, however, because they've been blatantly overaggressive the last 2-4 weeks. They tried, paltry paltry volume (not of high importance anymore but always funny). The fuckers know this [fabricated] leg is almost over. They got the propaganda-dow-spy-Record-High headlines to carryover to the news and nightly radiated news drops. Middle Finger Smirk from the truthtellers

Overleveraged_… Wed, 10/04/2017 - 16:19 Permalink

That's a big 10-4 Captain! Another fresh fall day, another new all time high in the Stock Market. The Market that keeps on giving. My favorite market. To think, there are still thousands of people who truly believe that "the Crash" is just around the corner. LOL. I get to the point where I now laugh at people who think that there's going to be some big reversion to the mean. It will not happen as a crash is no longer possible.Folks, this is not difficult at all. Prices will not stop because Central Banks will not stop printing! They know, you know, everyone knows, grandma knows, that IF they stopped printing there would be a crash and they would all get fired. We have crossed the Rubicon. There is no going back now. It will be print until we die. Everyone has two choices: 1) Go hard and heavy 3x Long Leveraged S&P 500 indefinitely2) Diversify into non-Fiat based assets.The fact is if you want to make MONEY, dollars that you can spend soon then you just have to get into the stock market. If you want to plan for the day 50ish years from now when the empire collapses then sure get some non-Dollar assets. Me, I am trying to make as much money as possible so I can quit my job. I am up about $70,000 on the year so things are going great.There is simply no logical reason for stocks to crash. Infact there is no logical reason for stocks to remain the same. The only logical conclusion based on actions of central banks is that stocks will go UP. If you think a crash is coming you are simply not being logical.Trump, the Ultimate Stock Market President has your back. Stocks are ALL he has to point at that both Dems and Repubs and the public can agree that he's doing a good job with.

Keltner Channel Surf Overleveraged_… Wed, 10/04/2017 - 17:39 Permalink

How utterly Postmodern:  Mr. Yin & Dr. Yang are having a c-battery-powered laser fight, and in the process cancel each other out.One is clearly joking, spewing Bull-pucks to yank zh-ers’ chains (but isn’t quite executing up to MDB’s past standard), while the other is pretending to be serious in a ‘typical ZH perma-bear’ schtick that even he suspects is lamely executed, hence the baker’s dozen post-per-day strategy to make sure we ‘get it.’  The only conclusion is:  Pfunk, Ph.D. is a new account created by O-Leveraged’s middle school son (hence the 6th-grade texting abbreviations).  It appears droll tomfoolery runs in the family.  What a treat!

In reply to by Overleveraged_…

Overleveraged_… Keltner Channel Surf Wed, 10/04/2017 - 18:35 Permalink

Not quite I am a single man based in New England. Just here to share the truth about how I used to be bearish but have now seen the light. I truly was expecting a crash back in 15 and 16 and realized election night how it's just a losers game. There are simply too many people expecting a crash that will not happen. So I've gone all in the opposite direction and it was correct.

In reply to by Keltner Channel Surf

Father ¢hristmas D.r. Funk Wed, 10/04/2017 - 16:58 Permalink

He's alright to me.  I think I remember him saying he had liquidated his positions and copped a gang of barbarous relics waiting on a third of the stars to fall to Earth, and nothing happened, and PM's kept getting monkey hammered.So he got back into the Jewish casino, went in 3x overleveraged and he's been winning ever since.Shit, you can't hate on a gambling addict who turns to the Lord®, loses his home, his family, his job, and his savings, then decides to take a trip to AC and comes back up seventy dimes.He's just spreading his own gospel now.

In reply to by D.r. Funk

Quivering Lip Wed, 10/04/2017 - 16:31 Permalink

Finally, as a reminder, so far this year, the S&P’s maximum continuous sell-off (continuous daily declines) has been less than 2%. If this holds until year-end, then 2018 would be seeing the smallest such loss for the S&P for almost 100yrs (Bloomberg data starts at 1928).WTF. Who proofs this shit?

Atomizer Wed, 10/04/2017 - 16:58 Permalink

Tim Cooks new revolution idea is to use Bluetooth wireless for iAnal plug. When your asshole is puckered. iPhone will send out a friend so you get Aids Butt fucking and need pharmaceutical drugs to cure you. Hahaha. Stupid fucks. 

Atomizer Wed, 10/04/2017 - 17:04 Permalink

My partner keeps fucking my anal hole. It's large, do we have a drug to swell it's size? When I shit, it's like someone vomiting from my ass. 

Father ¢hristmas Wed, 10/04/2017 - 17:06 Permalink

I don't think Fight Club quite grasps the situation at hand.  Considering how Donald has dealt with Porto Reeko, and called a 72 minute response time to an active shooter with 60 dead on the Las Vegas Strip during a major country music concert a "miracle" in reference to the LEO's, do you really want the entire Western economic system to disintegrate on his watch?Put aside political inclinations and just reflect and internally debate for a while.

Atomizer Wed, 10/04/2017 - 17:31 Permalink

LOL, back in the days of going to a strip club. These bitchez would use all orfices to make a dollar. I was with Mrs Atomizer. It was fun to watch. Sick fucking woman. Dirty wenches. I quit, it was fun to watch. The best line they used. My electrity or cell phone is going to be cut off. I sarcastically said, me too. Pleasant mind fucking with stripping cunts. Love Mrs Atomizer, back in day. Loved fucking with people. You could raise them up, then break them down. People are so stupid. Sorry...I stopped doing it. It was a roll playing game. Mrs Atomizer said to stop. I did. These women thought I was going home to sleep with them. Not a chance. That's when breaking them down started. Claim use of restroom. Exit, never return. Dumb cunts.

absente reo Wed, 10/04/2017 - 20:48 Permalink

Great set of charts.  If you think this is too many charts, you are not a trader.  Which is fine, because very few people are.This is what ZH should be for.