After a tumultuous few days in the market, these are the three items that stick out:
1. Remarkable Calm
There wasn't a rush to quality over the last few days. Treasuries rallied, but not by as much as one might expect if this was a full-blown crisis.
2. Credit Spreads Didn't Blow Out
Yesterday, HYG was off 82 basis points and CDX was -60 basis point.
The differential is explained by short positions in HYG knocking that ETF down a bit. We haven't seen spreads widen like in 2008, which is a good sign.
3. Money Talks
China has literally trillions of dollars in reserves. Yes, they have a lot of work to do, and they don't quite get capitalism, but I think it likely the country can navigate these difficult waters.
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