Charles asked me what I meant when I described Junk Bonds as "studly".
The point I am trying to make is that the flight to Treasuries hasn't resulted in a widening of the spread between lower quality bonds that we would normally see. I take this as a very important divergence. Here is the spread between the yield of the ML High Yield Bond index and the 10-year Treasury since 1994. The current spread continues its move back towards the lowest levels since the index began:
The point is that I would be somewhat concerned by the flight away from stocks towards bonds and towards less cyclical stocks if this measure were confirming. Alternatively, you can just watch the ETFs "JNK" or "HYG"
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