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Macro & Policy · 8 September 2026
The regime's stated credit-stress driver is not corroborated by high-yield spreads, VIX or…
The regime's stated credit-stress driver is not corroborated by high-yield spreads, VIX or financial conditions, all sitting near their year's lows; the genuine extreme is the Treasury supply and rate-path story, with the 10-year yield at the 99.2nd percentile of its own year.
- What would prove it wrong
- If credit stress materialises as an independent driver, high-yield spreads and financial conditions indices would break their year's lows in tandem with deteriorating economic data on CPI or labour prints, removing the Treasury supply explanation's centrality to the regime read.
- Review condition
- the 11 September CPI y/y print: if it comes in below 3.0%, the supply story strengthens and the credit-stress driver loses support; if it breaks above 3.8%, credit deterioration becomes a plausible co-driver with the spreads data as the falsifier test
- Status
- Sustained · 9 September 2026
- How it settled
- High-yield credit spreads remain at the 8.3rd percentile and the financial conditions index at the 4.8th percentile of their own year, both still nowhere near the extremes needed to corroborate the regime's stated credit-stress driver, so the 8 September reading that the Treasury supply and rate-path story is the genuine extreme still holds.
A dated research thesis and its assessment. This is not portfolio performance or an investment recommendation.