Total short capitulation: that's the best way to describe what happened in the loan/bond universe during the last week. The only bond that widened was that of Aeroflex. Continued tightening in retailers and auto names has gone on beyond stupid-pill levels and officially entered the bizarro twilight zone: TRW Automotive Holdings (TRW) bonds tighter by 400 bps, with both Sealy (ZZ) and Neiman Marcus (Pending:NMG) tighter by roughly 300 bps. Fixed income fund managers merely looking at what is not tighter than comparable Treasuries and buying it without regard for rating, underlying fundamentals or how much time a company has before it files for bankruptcy. As all bubbles, this one too will end very badly.