Not every bank is measuring outsized dispersion across assets. Morgan Stanley’s correlation indicator has risen to a two-year high, though it remains below levels typically seen in equity drawdowns.
Still, Barclays is another proponent of the view that a perfect storm of one-off forces has been hitting markets of late.
Analysts cite a laundry list of localized drivers -- the bloodbath in General Electric Co., tumbling oil, California wildfires and Brexit turmoil -- as pushing credit premiums wider, in concert with elevated stock volatility. That suggests the market isn’t sounding fresh bearish alarms on the health of corporate balance sheets across the board.
“We do not think they indicate a broad increase in contagion risk and rather view the events of the past month more as idiosyncratic risks that happen to be flaring up at the same time,” strategists Bradley Rogoff and Shobhit Gupta wrote in a Nov. 16 note.
This article was provided by Bloomberg News.