Creditsights' Cisar Says Bond Spreads Approaching 'Danger Zone'

The transcript discusses the Federal Reserve's view on the functioning of credit markets, particularly focusing on the investment grade market. It highlights the technical challenges faced by this market, such as steep new issue concentrations and solid order books. The discussion also covers the implications of rate hikes and the potential need for the Fed to pause if market spreads reach certain thresholds, indicating a critical point in market stability.

How does the Federal Reserve assess the functioning of credit markets?

• By analyzing the stock market trends

• By checking the inflation rate

• By evaluating the pricing of deals and investor demand

• By monitoring the unemployment rate

What is the current state of the investment grade market according to the transcript?

• There is a lack of investor demand

• Deals are not pricing at all

• Deals are pricing with steep new issue concentrations

• Order books are empty

What challenges are mentioned in the investment grade market?

• No investor interest

• Lack of technical challenges

• Technical challenges are present

• High liquidity with no challenges

What does the Fed consider when the market spread reaches 150 basis points?

• It shows a stable market

• It is a safe zone

• It is a critical point that usually doesn't last long

• It indicates a market crash

What action might the Fed take if the spread widens to 200 basis points?

• Ignore the spread

• Lower interest rates immediately

• Pause and assess market functionality

• Continue hiking rates