Reflections: The Market’s Not Panicking—But the Bond Market Is
Swap spreads just hit record lows. Hedge funds are unwinding. China’s selling. And the Fed is watching. Closely.
One of the simplest ways to spot market stress doesn’t come from headlines—it comes from swap spreads.
They’re just the difference between the interest rate banks charge each other (SOFR swaps) and the rate the U.S. government pays to borrow (Treasuries). When that difference collapses—like it just did—it means something’s breaking.
In 2008, swap spreads …