Credit Cracks By Tom Graff About this article: Recent performance in credit, both investment-grade and high-yield, has been steadily positive since the stock market bottomed in early March. Some of this was due to a legitimate decrease in systemic risk as well as a mildly improved economic picture. But now credit looks extremely overbought, and investors would be wise to temper their expectations for further outsized gains. The chart below shows the price-only return (i.e., no coupon income) of the Merrill Lynch High Yield Master index for the last year (blue) along with the 75-day rolling average (red). I've also included a standard RSI calculation in green. Note that the investment-grade market shows a similar pattern if you control for general interest rates. High Yield Merrill Lynch Paired with the overbought signal are a few new cracks in the credit markets; some recent new... Or, call us at 1-866-321-TSCM (8726) Monday-Friday, 8 a.m.-6 p.m. ET. Outside the U.S. and in Canada, call 1-212-321-5200.

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