How the World Has Changed...Or Not

Here's a quick note before the long weekend. According to Bloomberg, GE 10yr paper is trading at the same absolute yield today as it was one year ago. GE is about the best corporate credit there is, certainly of any issuer that is consistently in the market. Other credits are generally trading at higher yields than one year ago, despite the decline in rates. The difference is the much wider risk premium being demanded now. The point of this is that the Fed can cut rates until the cows come home, but until investors are willing to commit capital and liquidity returns everywhere, the markets, particularly fixed income, will languish here in the netherworld. That will only happen once there more certainty around asset valuations. As mentioned yesterday, the mindset of the major players hasn't changed, and we're stuck here until that happens.