Leader Week in Review
October 10, 2014
Economic Data Releases:
During a light week in economic data, commentary from the Fed, the IMF and the ECB sent shockwaves through markets concerning global growth; Treasuries ended the week lower across the curve and both Investment Grade and High Yield Credit spreads widened. Spreads on High Yield spiked back to September 2013 levels while Investment Grade is up 17 bps since the low in June (see chart 1). With High Yield's yield-to-worst at 6.2%, it is no wonder the asset class saw $1.3 billion in inflows for the week.
Sentiment towards the economy has distinctly turned negative, but the facts are that the economy is growing, albeit at lower levels than desired, and the labor markets are much improved. The unemployment gap and underemployment gaps continue to narrow and are close to (or through) the average since 1994 (see chart 2). The US remains the "cleanest dirty shirt" in the closet.
Upcoming Economic Data Releases: