It is hard to miss the news: The stock market has been on a bit of a roll lately. But with far less fanfare, the credit markets, where the financial crisis began, are also showing signs of a spring awakening.
Companies with good credit are borrowing more money in the bond markets. Confidence in the banking industry seems to be returning, despite the daily ups and downs of financial shares. Even junk bonds, the high-risk corporate debt instruments, are luring brave souls again.
The revival is tentative and, like the gains in the stock market, which pulled back on Monday, it may well prove fleeting. But analysts say the improvements suggest that investors are starting to get some of their old nerve back, mainly because of sweeping federal efforts to get credit flowing again.
Home buyers are seeing some benefits of the credit thaw. Interest rates on a fixed 30-year mortgage fell to 4.61 percent for the week ending March 27, the Mortgage Bankers Association reported, their lowest levels on record.
On Monday, the Federal Reserve and central banks in Britain, Japan and Europe continued to try to chip away at the credit problem. They announced an agreement that could provide about $287 billion in liquidity to the Federal Reserve, in the form of currency swaps.
Businesses with better credit ratings issued $200 billion of debt in the first quarter, according to Thomson Reuters, compared with $188 billion a year ago.
Even as credit rating agencies predict high rates of default for 2009 and junk-rated companies like General Growth Properties, the shopping mall owner, struggle to avoid bankruptcy, investors are pushing more money into high-yield debt. Junk bonds just ended their best quarter in five years, and AMG Data Services said that $923 million flowed into junk-bond mutual funds last week, the most since 2005.