The following charts show the most recent data as of today, Aug 25th:
High-yield credit spreads are rising, but still relatively low compared to periods of real economic distress. Swap spreads are declining, and are at levels which typically coincide with periods of economic tranquility.
The energy sector is clearly the one most impacted by current conditions (i.e, collapsing energy prices). Defaults are very likely. The market has already priced in defaults on energy bonds of roughly $45 billion. However, that's less than 1% of the value of outstanding traded corporate debt in the U.S.
All credit spreads have widened, but investment grade spreads are still relatively low and HY spreads are not at levels that are extremely worrisome (the energy sector accounts for most of the spread widening in the HY sector).
The Vix/10-yr ratio backed off a bit today, but is still VERY high, almost as high as it was at the apex of the PIIGS crisis in late 2011. The market is very fearful of the global economic and financial market fallout of a slowdown in the Chinese economy and collapsing energy prices. Lots of bad news is being priced in.
At 16.5 today, the PE ratio of the S&P 500 (according to Bloomberg) is equal to its long-term average.
In the great scheme of things, stock prices remain in a long-term uptrend. The recent selloff appears to be a minor bump in the road.
The prices of gold and 5-yr TIPS still appear to be slowly trending down. This suggests that the market is gradually losing the significant degree of risk aversion that it acquired in the wake of the PIIGS crisis. It also suggests that the market's demand for "safe" assets is declining on the margin. Both are consistent with a market that is regaining some lost confidence. This is of course very much at odds with the huge rise in the Vix/10-yr index, and is perplexing, to say the least.
Commodity prices have been trending down for several years now, but are still quite high relative to where they were a decade ago.
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