One reason for the narrow spread between the Treasury 10-yr. and high-yield (junk) bonds, per Dec. 22 WSJ p. C4, is a basic shift in the market. As junk bond issuers borrow directly from hedge funds and pension trusts, scarce junk bond supply drives those yields down closer to Treaurys.
3 comments:
I thought you might mention that all Dow components fell on Friday. That's a buy. Yet the yield curve is looking dicey. Are we on the sidelines when the indicators are mixed?
Is this board dead? Nothing posted since 12/22/06.
The curve is, indeed, dicey. Yet the government called up troops last summer and then committed $70 billion additional funds to defense. As TIMING THE MARKET (Wiley, 2005) says, a troop call-up is a strong buy signal because war is stimulative for the economy and the market.
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