The above chart shows the graphs of low-grade bond yield spreads relative to the yields of Treasury bonds and the S&P 500 from January 2007.
The market peaked in 2007 when spreads moved higher. Since 2007, all the declines in the market have been accompanied by higher spreads. Reason: spreads reflect credit risk and when credit risk rises stocks tumble.
This is one of the many indicators we follow to determine when the market finally bottoms.
More, much more when you read older posts and subscribe to The Peter Dag Portfolio by going to https://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
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