By CrispyPork @ Shutterstock.com
Only two times before has the ratio of junk bond yields to high-grade bond yields been lower than it is now. Those two instances preceded the Asian market crisis, and the global financial crisis. Bloomberg’s Sid Verma and Cecile Gutscher report:
According to a key valuation metric, investors are headed for the kind of bullishness on high-yield bonds that’s been seen just twice before: during the halcyon days of 1997’s tech bubble before the Asia crash, and on the eve of the global financial crisis a decade later.
The ratio between U.S. junk-bond yields and their high-grade counterparts has reached levels that “hearken back to the high risk appetite days of October 1997 and June 2007,” CreditSights Inc. strategists Glenn Reynolds and Kevin Chun wrote in a note this week. That’s “not a great set of dates along the credit market timeline of overconfidence,” they noted.
Read more here.
Jeremy Jones, CFA
Latest posts by Jeremy Jones, CFA (see all)
- Man vs. Machines: Can Humans Win a New Stock Market War? - July 18, 2019
- Hard Criticism for Amazon’s Advertising - July 17, 2019
- The Disaster Waiting to Happen in Bond ETFs - July 16, 2019