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Credit Risk Gauge Surges to 14-Month High on Powell Comments

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Powell: Fed Is 'of Mind' to Raise Rates at March Meeting

A measure of credit risk rose on Wednesday to the highest level since November 2020 after Federal Reserve Chairman Jerome Powell said the central bank was ready to raise interest rates in March and may continue to hike to tackle inflation. 

The cost of guaranteeing the debt of a basket of investment-grade companies against default jumped as much as 1.9 basis points to 60.9 basis points in the market for CDX.NA.IG credit derivatives. In the high yield market, a basket of junk credits saw its price decline to about 106.9 cents on the dollar, the lowest level since November 2020, according to the CDX.NA.HY index.