It’s Thursday afternoon and this week that means it’s actually Friday afternoon.
And if it’s de facto Friday afternoon, that means people have officially stopped thinking for the week and that removal of “thinking caps” will be invariably reflected in a propensity to avoid any and all posts longer than about 200 words (give or take).
So, in the interest of saying something without saying much (that’s sometimes a tall order), I dug around and found a fun chart for readers.
The following encapsulates the trouble we’ve been talking about in auto land over the last two weeks (anyone interested in the full story, start here). So this may not look like a big deal, but make no mistake: it is notable. This is cash spreads on US auto parts bonds versus IG cash bonds as a whole:
As you can see, that’s a pretty dramatic run-up in a really, really short period of time. Here’s Goldman
Clouds darken for Autos…
The spread differential between the IG Auto sector and the broader iBoxx IG index has widened to 24bp (165bp vs. 141bp, respectively), with spreads on Autos revisiting their late January 2017 levels when GM was upgraded and nearly double the average differential by this time last year (Exhibit 2)
Remember, the auto loan market is ~$1.2 trillion in America. You don’t want to see these types of “cracks” developing…