Spreads Signal Stability
Spreads across various sectors of fixed income are signaling that areas of recent stress are receding, a positive omen for bonds and stocks alike. Spreads can be generally defined as the difference between the yield of a security or index relative to another, lower-risk, comparable maturity security or index, and can be an indicator of market concern or optimism. For instance, if investors are enthused about economic conditions and believe default rates will be low moving forward, they will demand less of a premium (relative to very low risk assets like U.S. Treasuries) in order to take on the risk of lower-rated and higher-risk segments of f
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