High Yield Bonds flashing a warningWe have seen this movie before. High yield bonds work as a good proxy for risk-appetite in the market. Using a simple trend filter, we see clear warning signs developing. Question is - how far will this go?
BAMLH0A3HYCEY trade ideas
Credit SpreadsWhen economy faces drag lending and borrowing of USD tightens. Investors expect higher yield for taking more risk causing the spread to widen, and liquidity to increase this also shows expectations of future default risk. High yield spreads- option adjusted have bottomed and are now starting to slowly trend upwards. This is showing the market is not really worried about credit risk. This is something to watch moving forward, and might play out for a nice set up.
