Swap spreads lead the way (2)

I first posted this chart last December, when I noted that declining swap spreads were an excellent sign that the fixed-income market was recovering, and that presaged improvement in other areas as well. Swap spreads have since gone on to tighten further, today declining below 50 bps. It may be too much to hope that equities close the gap with swap spreads depicted on this chart any time soon, but at the very least I think this tells us that the equity rally is not ephemeral and has excellent upside potential.