Credit spreads are still high, but not scary

Here's an up-to-date version of my chart showing 5-year credit default swap spreads on investment grade and high yield bonds, which in turn is a good proxy for generic credit risk in the bond market. Spreads widened in early May on the back of surging fears of a Greek default, but they have since settled back down. High-yield spreads are about 75 bps lower today than they were at the peak of the Greek crisis earlier this month. If I take this chart in the context of swap spreads that are now back down to a "normal" level (2-yr swaps today are 36 bps, after reaching a high of 64 bps on May 25th), I don't see any reason to believe that economic and/or financial fundamentals have deteriorated, much less that a double-dip recession looms large. The current level of credit spreads reflects the continuation of distress, to be sure, but spreads are not even remotely at a level which would suggest another recession.