New Jersey forensic accountant Robert Bonavito discusses what the credit market is, and how it can be used to forecast the state of our economy, and your business.

In the credit market, people are trading bonds and similar types of assets. The credit market is so large that it dwarfs the stock exchange. The daily volume in the credit market can be trillions and trillions of dollars. Because so many bonds are being traded, it gives you a good indication as to how the market is doing. it can tell you if there are any negative impacts in the economy before they show up in the equity market.

The state of the credit market helps us to build up figure capitalization rates based on the interest rates now. When we do an economic analysis of a business to forecast what changes will happen to that business, we look at the two and ten year spread based on the credit market. If there are a large number of people selling ten year bonds, that tells you that the interest rate on those bonds is too high. The economy is going to get worse or better depending on what those bonds are doing.

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Robert A. Bonavito, CPA
1812 Front St.
Scotch Plains, NJ 07076
908-322-7719
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