Default Risk Ticks Higher, But Still Below Prior Highs

Below is a price chart of a North American investment grade credit default swap index that measures default risk for 125 companies.  As shown, default risk peaked in early December 2008 and has declined somewhat since then, but it just broke above a short-term trading range today.  This isn't surprising given the recent troubles in equity markets, and from a technical perspective, this breakout doesn't bode well for the market going forward.