The spread between junk bonds and 10-year treasury on 6/23/14 hit a very narrow 222 basis points. At that time, the S&P 500 was trading at 1962. Since then the junk bond spread widened to over 5% in December and currently stands at 415 basis...
About a month ago, we noted that the spread between high yield bonds and treasuries was not confirming the all-time high in the S&P 500. Since that time, we have had a slight turnover in the equity market but an even larger move in junk...
Since the ”666” intraday low, high yield spreads and equity prices have basically moved in lockstep together. As equity prices moved higher, the spread between junk bonds and 10-year treasuries narrowed. As the chart below illustrates, this relationship started to diverge during the summer....
Earlier this week as asked what junk bonds know that stocks don’t. Since then junk spreads to the 10-year US Treasury bond have widened another 20bps as they have accelerated higher. Given the 88% correlation with stocks over the last year, this is something that...
Last week we wrote that the bond market is following perfectly the reduction of QE with new 1-year lows and with today’s bond moves that trend is still firmly in place. In what may seem counter intuitive, treasury bond yields have had a high positive correlation...
From a theoretical standpoint equity and high yield debt are not all that different. In both cases consideration of the return of one’s capital plays a large part in the investment process since both forms of capital are at the bottom of the capital structure....
The chase for yield has driven the the spread between junk bonds and AAA bonds to a 20-year low level of just 79 points. This has happened at the same time as the AAA-10-year spread has widened. The Junk-10-year spread remains historically tight....
According to the FT, ”Groups in Europe have already put €15bn in new high-yield debt to work funding mergers and acquisitions this year, compared with €9.6bn for all of last year, according to Barclays Research....
The spread between junk bond yields and the yield on the 10 year treasury bond hit a new cycle low yesterday, confirming the strength we’ve seen in the equity markets....
