Corporate Bond Spread at Narrowest Since 2007 Before Jobs Data

The extra yield investors demand to hold corporate bonds over Treasuries was the narrowest in six years before a government report this week economists said will show the U.S. added almost 200,000 jobs in December.

Securities in the Bank of America Merrill Lynch U.S. Corporate Index yielded 1.27 percentage points on average more than Treasuries as of Jan. 3. It was the smallest spread since July 2007. Corporate bonds fell 1.5 percent last year, with their higher yields tempering the decline as Treasuries tumbled 3.4 percent, based on the Bank of America data. Federal Reserve Chairman Ben S. Bernanke said last week the headwinds that have held back the U.S. economy may be easing.