There are a few signals that indicate a certain amount of confidence has returned, namely a decrease in volatility, a slowdown in subprime-related write-downs, stability in corporate bonds and an increase in liquidity.
The recent spread widening across the curve is expected to retrace as the scale of subprime risk becomes much clearer. The re-pricing of credit risk should gradually allow the markets to remain calm and result in tightening spreads. Thus, the stability in the market can only happen if liquidity returns.
Has the drop in the dollar changed your appetite for euro-denominated paper
Most central banks...
