As the equity rally faded on Tuesday - the Dow Jones industrial average was down 0.6 per cent in mid-afternoon trading - the voice behind the Accrued Interest blog said that the rally in the credit market should hold up.
"This makes total sense to me, as the government's manoeuvres mean more in terms of survival than thriving profit growth," the anonymous blogger said earlier in the day.
Accrued Interest pointed out that the iShares Corporate Bond ETF (LQD/New York) rallied 5 per cent on Monday, after investors grew more confident that the U.S. government's rescue attempt would translate into less fear over the number of defaults on corporate bonds.
However, the LQD trading on Tuesday afternoon hardly showed that investors were celebrating corporate bonds in any substantial way. Yes, the ETF was above water, but only by 5 cents, to $86.24 (U.S.).