Corporate defaults and bankruptcies. Defaults lag spreads but confirm them; a rising rate with tight spreads is the divergence to watch.
What to watch: Moody's / S&P default rates; Chapter 11 filings. It arrives monthly, and the effect typically lasts months.
It sits in tier 2 — Directional: Moves the index for days or weeks. Scheduled data releases, policy decisions, global spillovers, and the prices of money and energy. This is the tier most professional attention is spent on.
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Chains it would confirm
Trends tracked by this
Also in Credit and banking
- Credit spreads
- Bank failures and systemic stress
- Bank lending standards (SLOOS)
- Bank earnings and provisions
- Private credit and shadow banking
- Commercial real estate and office loans
- Subprime auto and credit-card delinquencies
- Student loan repayment and delinquency
- Mortgage delinquency and foreclosure
- Insurance pricing cycle and reinsurance renewals
- Deposit betas and net interest margins