Historically asset performance has correlated strongly with the change in central bank balance sheets, especially on the way up. As a result, the big question is whether risk assets would exhibit the same correlation on the way down as well, i.e. drop. Citi’s analists say that for credit the answer appears to be yes, because as the following chart shows, the ongoing decline in CB assets is starting to have an adverse impact on investment grade spreads which have been pushing wider in recent days, in large part due to the sharp moves in government bonds underline the credit spread.

– source ZeroHedge.com

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