Credit spreads on a widening trend

Over the past three months a major concern for investors in the US has been widening corporate bond yield spreads and a pick-up in default rates. While the first is an indication of tightening liquidity conditions, the second is both part cause and consequence of those conditions, and a reflection too that global (and particularly US) economic growth is slowing. Both incite fears of a hard landing. In this environment it would be natural to expect only the best quality government fixed income assets to perform well. Yet an examination of the UK bond markets during this period reveals...