Smell of Default in the Air Says Deutsche Bank

There is a “smell of default” in the air, a recent Deutsche Bank research presentation notes, as high yield spreads are widening while Venezuelan bonds – and the credit default swaps surrounding them – are raising Greek-like concerns. All of this could be providing stocks headwinds at some point, but with the S&P 500 up over 100 points in three days – up some 32 points at midafternoon trading – it doesn’t seem to matter, at least not yet.

Default rates move past 4%, headed to 10%

When a trend begins, market price momentum can often push prices to extreme levels before the trend reverses. Such...