Are We Heading for a Dangerous Go-Round in the Credit Markets?

Includes: AMBC, C, LEH, MER
by: Michael Panzner

Until this past year, many in the mainstream media seemed to think that the stock market was the only true barometer of which way the financial winds were blowing.

In contrast, the fixed-income market, despite its much larger size and its absolutely critical role in greasing the wheels of a credit-dependent economy, was often ignored, unless there was a big move in yields in response to unexpected economic data or the Fed had stepped up the pace of its monetary interventions.

However, it has been the credit markets that have correctly anticipated and delineated the tsunami of financial destruction that has reverberated throughout the financial system and the economy.

Based on the following report from David Gaffen at the Wall Street Journal's MarketBeat blog, "Write-Downs, Right Down to the Ground," it looks like the coupon-clipping types are calling for another dangerous go-round - like we saw a few months ago - in the period ahead.