Activities in Credit Markets Signal Economic Changes

Reuters reports that some large banks believe current credit prices overestimate economic outlooks and are vulnerable to market corrections. The value of credit spreads in the market currently implies a 5 percent global growth rate when the IMF forecasted a growth rate at 3 percent. While credit spreads are dropping, demand for financial products hedging against poor credit performance is rising. Downturns in the credit market will impact the equity market.

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