Everyone is watching public credit spreads sit near their tightest since 2007 and calling the all clear. They are watching the wrong market. Myth: Credit is calm because spreads are at multi decade lows. Reality: The default wave already started. It is just happening in private credit, where there is no public spread to flash the warning. ❗️ The details: · Fitch put the US private credit default rate at a record 6 percent for the twelve months through April, the highest ever recorded for the asset class · Public high yield spreads sit below 3 percent, near the tightest since 2007, pricing in almost no stress at all. That is the gap · It is broad and real, not a one off. 99 defaults, 81 of them first time, the most since Fitch started tracking. First Brands and Tricolor were the opening cracks · More than half could not pay cash interest, so they borrowed more to cover it. The stress is being papered over, not priced · Private credit is a market of nearly 2 trillion dollars that does not trade on a screen. Floating rate, so the jump in long term yields squeezes the weakest borrowers first. No daily price, no public spread, no early warning 🏆 Why it matters: · Credit stress never stays in its lane. It leaks into stocks and crypto, and by the time the public spread finally moves, the move is already late · The calm everyone is citing is partly just an illusion of where the risk is hiding A market with no price never flashes red. Follow if you want the warning before the spread does.