As noted earlier with the VIX, high yield credit spreads are also down to their lowest levels in over six months. Based on data from the Merrill Lynch High Yield Master Index, junk bonds are currently yielding 1,308 basis points above comparable treasuries. These levels are by no means normal, but they are considerably better than the 2,100 basis point spread investors were dealing with in December. Additionally, they are also indication that the doomsday scenario markets priced in following the Lehman bankruptcy are being erased.
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