"The Snowball-Earth theory argues that during one or more ice ages, the entire earth (including areas around equator) were entirely frozen, with the latest episode occurring before the Cambrian explosion of life", Macquarie's Viktor Shvets begins, in a March 10 note which, to put it mildly, paints a grim picture of the future barring policy intervention.
Over the past week, I've spent plenty of time documenting apparent signs of stress in dollar-funding markets and warning that various cracks are forming in credit.
I've endeavored to avoid bombast in my assessments, although objectively speaking, Monday was a harrowing day for some measures of credit stress. CDX.IG, for example, widened the most since Lehman, and as the following scatterplot shows, the move was far more dramatic than even the steepest slide in equities since the crisis would have entailed.
(BBG, h/t Luke Kawa)
That suggests credit is in all kinds of trouble. The moves in junk spreads on Monday are hard to fathom. High yield spreads widened 92bps on the day, the largest single-session jump in percentage terms since September of 2001. That was presaged early on in a six standard deviation move for CDX.HY.
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