Amidst the market’s dramatic recovery, a disconcerting dissonance has emerged between bankruptcy filings and credit spreads, signaling potential challenges on the horizon. According to Apollo Sløk, a notable economist, regional bank spreads have recently widened, hinting at a disconnect that demands closer scrutiny.
Traditionally, the Federal Reserve adjusts interest rates based on real economic conditions. The current scenario prompts a crucial question: why should the real GDP potential be higher? The dynamics suggest that sustained higher real GDP without accompanying inflation could reshape the winners and losers in the economic landscape.
As the markets brace for a broader revival, it becomes imperative to decipher the underlying shifts in credit spreads and bankruptcy filings. This intricate dance between economic indicators and market realities may hold the key to understanding the path ahead. Investors and analysts alike are closely monitoring these warning signs, anticipating potential disruptions that could reshape the financial landscape.
Sources:
There is a disconnect between bankruptcy filings and credit spreads.
via Apollo Sløk pic.twitter.com/SuCcITbdnm
— Daily Chartbook (@dailychartbook) November 27, 2023
"Regional bank spreads have widened recently."
– Apollo Sløk pic.twitter.com/iTsQN2BFoK
— Daily Chartbook (@dailychartbook) November 27, 2023
This is telling you fed rate typically is set as a response to what is going on in real economy.
Also that rgdp potential should be higher; Question is why.
If we get sustained rgdp higher without inflation then you need to figure out who are the winners t.co/dfqL08L5H7
— #ItsBullish (@sonofabeach56) November 26, 2023
🇺🇸 #Bond Market’s Dramatic Recovery Is Seen as Opening Act for Broader Revival – Bloomberg
t.co/jlQQ7hrOKL pic.twitter.com/riisHhekbt— Christophe Barraud🛢🐳 (@C_Barraud) November 27, 2023