Good morning subscribers. We pointed out a few weeks ago the market had likely entered into a digestion area we are referring to as the “frustration phase” of the long-term bottoming process (Figure 1). There is clearly a bid in the market as expectations of an economic reopening continue to hit the headlines, and the Fed reinforces their willingness to aggressively respond to any areas of credit that are showing any signs of stress. Remember, following that 04/09 Fed decision to support risk assets in various areas of High Yield corporate and Municipal debt we took the worst-case retest off the table because it made clear the Fed was supporting risk assets.
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