Over the past several weeks, credit spreads in US Investment Grade and High Yield bonds have risen while US equity prices hover near key support levels established since the S&P 500 and Nasdaq Composite indexes posted record highs in early September. Some consolidation in equities can be justified given the rapid recovery from the pandemic-induced lows reached in late March. The bond market appears to be sensing heightened risk. Credit spreads fell a considerable amount since the late-March spike but remain elevated compared to pre-pandemic levels and are on the rise even considering the modest tightening this past week. The yield on the 10-year US Treasury has been relatively stable since the beginning of September, fluctuating 5-10 basis points, and the US Federal Reserve remains in hyper-accommodative mode implying that the rising price of money for US corporate creditors is the main driver of widening spreads. This trend suggests that there may be further volatility ahead for US corporate securities. [chart courtesy Bloomberg LP (c) 2020]