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.
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.