Kaeppel's Corner
What credit spreads are telling us about the banking crisis
Credit spreads tend to widen sharply during times of stress in the financial system as investors move away from riskier credits into what they perceive to be safer credits. Credit spread "spikes" are a beneficial warning sign for investors. Conversely, when a perceived crisis unfolds, and credit spreads do not widen significantly, it also may provide investors with important information.
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