Bottom Line: Credit markets tightened through most of this month after drifting wider throughout May. Overall, we see few signs of systemic risk. Most credit markets look to be healthy, if still wider than their historical averages in most cases.
Positives --- Financial conditions tightened in June.
- Bank CDS suggests lower risk among the GSIBs.
- SOFR swap spreads suggest a healthy market with relatively few concerns about counterparty credit risk.
- Agency MBS is still a "watch" but is upgraded from a "warning" in our framework.
Concerns --- US unsecured BB and BBB-rated corporate bonds still show hints of concern.
- Leveraged loans remain a key point of concern.
- Regional bank equity performance remains a concern, the but the local low is holding for most names.
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