We’re getting mixed signals across the credit markets.  On the CMBS and ABS side we are seeing continued asset deterioration and a clear sign that the reflation trade is not working where the Fed is targeting it.

The TED spread continues to improve as LIBOR normalizes from extremely stressed levels.

As we mentioned last week the commercial paper decline represents the alarming and continuing threat of deflation across the economy.

Like the TED spread, the discount rate spread continues to normalize off severely stressed levels.

High yield bonds remain at elevated levels compared to the pre-Lehman debacle, but continue to show signs of improvement.