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How The Credit Market Is Doing in 2018

Interest-Rates / Financial Markets 2018 Aug 26, 2018 - 03:27 PM GMT

By: Dylan_Moran

Interest-Rates The credit market is one of the most significant markers of the global economy, to that point that many investors call it a figurative “canary in the mine.” In other words, when the credit market struggles, it means the rest of the economy is about to struggle as well.

Since the performance of the credit market can be a helpful guide in helping determining the health of other aspects of the economy, it's important to understand what it is--and how it's doing. To learn more about how the credit market is doing now, let's take a closer look at what the credit market is and how it is doing in 2018.

What is the credit market?

In short terms, the credit market is the market in which organizations (including businesses as well as nations/governments) issue debt to a number of investors. This debt can be issued in many forms, including but not limited to: junk bonds, investment grade bonds, dwarfs, mortgage pools, commercial paper, collateralized debt obligations and much more.

How is the status of the credit market determined?

The overall status, usually referred to as health, of the credit market is determined through examining the value of current interest rates as well as the amount of investor demand. Another important aspect of determining the health of the credit market is how interest rates are spread between a variety of bonds, particularly corporate bonds and treasury bonds. The higher the interest rates, the higher the risk of defaulting, and the higher the chance that the economy made slide into trouble--including a potential recession.

The state of the credit market in 2018

The 2018 credit market is currently stable, but not thriving; in other words, interest rates are spreading or increasing to the point that they signal a possible recession, but neither is the market thriving to the point to signal a period of prosperous economic growth. This is good news for those who rely on aspects of the credit market, such as certain bonds as well as loans found at LoanReviewHQ, for business opportunities and national stability, but it may be disappointing to those who are interested in jumping into the latest credit market developments to increase their business spread. Organizations who are interested in issuing credit market papers and bonds should ideally look elsewhere to improve their business opportunities due to the stability--that is, lack of growth--in the credit market.

Looking to the future

The future of the credit market for the 2018 is likely to remain stable. This is both good news and bad news for both companies and countries who are heavily invested in the credit market’s success. It is excellent that the credit market will not struggle, thus signaling economic trouble or even a recession on the horizon; yet the lack of serious positive growth for the market means that the economy will not be significantly more prosperous either. Still, despite this moderate news, the lack of a failing credit market will be a relief for the millions and millions of people whose livelihood depend on the various components that make up the credit market.

By Dylan M.

© 2018 Copyright Dylan M. - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2018 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

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