Derf's Grotto

[fung_derf]

Ð....I found this interesting this morning and makes me feel as if I should shift some of my cash to short term high quality bonds right now...

Rising yields on safest debt threaten to cannibalize junk demand:
Global high-grade notes saw yields climb to 4.4% this month for the first time since the global financial crisis, fueled by fears that interest rates may stay higher for longer. But the yield on junk-rated bonds aren’t anywhere near their historical highs, a sign that the prospects of economic troubles and the shaky outlook for borrowers aren’t being priced in. And so the yield gap between the two asset classes is about 500 basis points, less than half the spread in early 2020. That not only raises concern junk bonds aren’t compensating investors for the risks ahead, it also boosts the case for buying investment-grade notes, especially given the profit warnings that some companies sounded this earnings season. “We think investment grade is pricing in the risk of recession but we’re not there yet in high-yield,” said Barnaby Martin, a credit strategist at Bank of America. Bloomberg.com