Credit Is Cracking At The Bottom—But Small-Cap Vol Hasn’t Noticed

Credit is cracking at the bottom

US credit is not experiencing a market-wide break. Investment grade, broad high yield and single-B spreads remain relatively contained. The fracture is lower down.

CCC and lower spreads have detached sharply from the rest of the quality ladder. This is not broad contagion. It is a concentrated repricing of borrowers with the least capacity to absorb higher funding costs.