Are credit spreads wide enough?

Have credit spreads widened enough? We think the answer depends upon what happens to the economy and we use US credit markets to give historical context. This leaves us more concerned about high-yield than investment-grade but we believe spreads could still widen in both.

As is often the case during recessions, credit markets have received a lot of attention. Spreads have widened and liquidity has been difficult at times (according to my trader colleagues). So, how bad has it become and what does the credit market tell us about the state of the economy?

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