Corporate Credit Spreads Are Widening, But

Credit risk in August has spiked, and it is concerning institutional investors, a UBS report notes. As Corporate credit spreads have been materially widening of late, indicating a degree of concern, several correlation anchors, likewise, appear to be diverging. There are several factors driving the recent risk-off movements, as “headwinds abound.” While remaining “modestly cautious,” UBS analysts Stephen Caprio and Matthew Mish point to idiosyncratic opportunity and forecast positive market environment going forward with one meaningful caveat involving "geopolitical risk."

Recent widening of corporate credit spreads could be due to geopolitical risk and forced selling

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There are signs of stress in the corporate credit market that, to some degree,...