What's driving credit spreads
Drivers | EU Spreads
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TECHNICALS | top driver
Insights
22-06-2026
CONCEPT
Credit spreads are the market’s primary fear gauge for corporate debt. We monitor spreads alongside long-term yields and equities to pinpoint whether their shifts are driven by interest rate volatility or fundamental changes in investor confidence.
CURRENT READINGS
- Looking at the past two weeks - flat EU IG spreads and lower government bond yields display a weak correlation of 0.24 (softening) showing no clear relationship. In parallel, flat EU IG spreads and lower stock prices display a weak correlation of -0.16 (turning more negative) showing no clear relationship.(Toggle for HY spreads)
- In general terms, we should expect spreads to be negatively correlated with both stock prices and bond yields.
MARKET IMPLICATIONS
- Yields check - In the past few sessions, EU IG spreads have been moving independently with respect to government bond yields. Equity check - EU IG spreads have been moving independently with respect to stock prices. Overall, the broader market behavior reflects deteriorating growth prospects. (Toggle for HY spreads)
- In summary - Given the irrelevant correlation readings, it is clear that the spreads in focus have not been influenced in major ways by either stock prices, sentiment, expected growth, inflation or monetary policy changes recently. They have been affected by technical factors instead, such as rebalancing of supply and demand
Viceversa, compressing spreads are normally driven by either rising yields or rising stock prices, on the back of higher expected growth or improving investor sentiment.
Drivers | US Spreads
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STOCKS | top driver
Insights
17-06-2026
CONCEPT
Please refer to the same intro as above.
CURRENT READINGS
- Looking at the past two weeks - flat US IG spreads and lower government bond yields display a weak correlation of 0.25 (increasing) showing no clear relationship. In parallel, flat US IG spreads and lower stock prices display a negative correlation of -0.55 (turning more negative) as they moved in opposite directions frequently.(Toggle for HY spreads)
- In general terms, we should expect spreads to be negatively correlated with both stock prices and bond yields.
MARKET IMPLICATIONS
- Yields check - In the past few sessions, US IG spreads have been moving independently with respect to government bond yields. Equity check - Despite stocks rallying, US IG spreads remained flat, showing credit investors are more cautious than equity buyers, with respect to stock prices. Overall, the broader market behavior reflects market technicals rather than broad macro drivers. (Toggle for HY spreads)
- In summary - The recent equity spin seems to have influenced the credit spreads in focus more than bond yields - in other words, stock performance remains top of mind for investors, while changes in monetary policy or inflation are not worrying credit investors so much.
Viceversa, compressing spreads are normally driven by either rising yields or rising stock prices, on the back of higher expected growth or improving investor sentiment.