Credit Spreads Set to Balloon, India to Outshine China?

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Credit Spreads Set to Balloon, India to Outshine China?

By Erik Norland, Senior Economist, CME Group

Hedging the Next Explosion in High Yield Bond Spreads

Highlights:

  • Stocks, high-yield corporate bond prices often fall in tandem
  • Only a moderate risk of credit spreads ballooning in 2017
  • But risks could rise if Fed accelerates pace of tightening
  • Flat or inverted yield curve a warning sign for spreads

Will India Trump China as U.S. Policy Shifts?

Highlights:

  • China’s yuan overvalued, Indian rupee at fair value
  • Foreign exchange reserves falling in China, rising in India
  • U.S. trade war could destabilize China’s economy
  • India’s Nifty Fifty index has outperformed China’s A50