The Big Number
The spread in the yield of CCC-rated high yield bonds over the equivalent U.S. treasury interest rate.

What this means
While broad credit markets look healthy, the lowest quality area of the market continues to show signs of weakness. The yield premium on CCC-rated high yield bonds is the widest since 2016 – a potential harbinger of future stress across the board.

Market Notes
U.S-China trade talks continued to meander along with slow but steady progress. In Europe, new European Central Bank president Christine Lagarde made waves with talk of a more integrated Europe and a review of the monetary framework. Fiscal stimulus there would likely be a positive for markets.

The Markets’ Reaction
After six straight weeks of positive returns markets gave back some gains, with the S&P 500 (SPX) down -0.3%. International developed markets (MXEA) fell -0.6% while emerging markets were basically flat (MXEF). Yields on 2-year treasuries rose 2 basis points, while yields on the 10-year declined by 6 basis points.

What to Watch
Not a lot of data out of the U.S. in a holiday-shortened week, though Black Friday and Cyber Monday may draw some investor attention. There will be a second look at 3Q U.S. gross domestic product (GDP) on Wednesday and inflation readings in Europe on Friday.

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