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Opinion
Robert Burgess

The Most Important Number of the Week Is 359

The narrow spread between junk bond and Treasury yields suggests that what is happening in stocks may be little more than a routine repricing after a strong run-up.

What is happening in stocks may be little more than a routine repricing after a strong run-up.

What is happening in stocks may be little more than a routine repricing after a strong run-up.

 Photographer: Michael Nagle/Bloomberg

What seems lost in all the hand-wringing about whether the stock market is a bubble that is starting to burst is any discussion about what’s happening in the $1.62 trillion market for U.S. junk bonds. Even a cursory look at this critical part of the corporate debt world suggests that what is happening in equities may be little more than a routine repricing after a strong run-up.

Sure, it hasn’t exactly been a great year either for investors in corporate bonds with credit ratings below investment grade. The Bloomberg U.S. Corporate High Yield Bond Index was down 1.25% for January through Thursday, putting this month on track to be the worst since the start of the pandemic in March 2020.