Wider junk bond spreads are not a good sign. The High-yield Index/Treasury 10-year spread is increasing every day. It has gone from 586 basis oints to 735 recently as fear has increased.
We may be bouncing along the bottom of the stock market; but it's a long, painful bounce!
2 comments:
I expect this will continue until the leverage excesses are gone, and the credit markets start functioning again, and the economy picks up . A healthy fear may keep that from happening for quite a while.
You can see the mortgage fear in the 10 year 30 year fixed mg spread, which has widened since the fed started to cut. This will continue to hurt home sales.
I'm thinking the Gov. intervention on the GSE's signal a likely bottom. Watch for the spreads to narrow as confidence builds. We also have the election uncertainty coming to a close in the next 2 months. Things are looking up.
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