Thursday, October 11, 2007

High Yield Credit Spreads Fall Below 400

In another sign that credit worries are slowly abating, yields on high yield corporate debt fell below 400 basis points today for the first time in over two months (Lower spreads are generally associated with lower levels of risk aversion). Below we chart the changes in high yield corporate bond spreads since 1997 with spikes similar to the most recent one highlighted in red. Some bears are making the argument that spreads remain elevated relative to their lows in June (395 basis points now versus 251 basis points on June 1st). However, we would note that five years ago, when the bull market started, these spreads were closer to 1,100 basis points above Treasuries- nearly three times the current level.


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Lunch is for wimps

Lunch is for wimps
It's not a question of enough, pal. It's a zero sum game, somebody wins, somebody loses. Money itself isn't lost or made, it's simply transferred from one perception to another.