Editorial Board
Is This Another Bubble? We Can’t Know Without Better Data
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Are the easy-money policies of the world’s central banks setting financial markets up for a crash? We would have a much better idea if we measured how much of the buying is being done with borrowed money.
In recent months, soaring prices of stocks and bonds have left many investors wondering whether the potential returns are worth the risk. The Standard & Poor’s 500 Index is in record territory despite a weak economic recovery. Junk bonds included in a BofA Merrill Lynch index are yielding only 4.4 percentage points more than U.S. Treasuries, close to the narrowest spread since late 2007.