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Date Posted: 6:47:09 2/06/23 Mon
Author: Jasper
Subject: Book em' Dano.

.
Some of the prior examples of this spread nearing zero are quite ominous, including pre-crash 1929 and pre-GFC 2007.

There are a few different ways of interpreting the collapse in this spread but I’ll go with this: investors are writing-off corporate credit risk while simultaneously expecting rate cuts, leading them to buy corporate bonds to lock in slightly higher yields for longer. However, those two scenarios (rate cuts and a soft landing) seem somewhat exclusionary. In other words, this spread can be thought of as a proxy for investors expecting a recession while forgetting what that entails.

https://thesoundingline.com/treasury-to-corporate-bond-spread-near-record-lows/



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