OT junk bond spread: Yes, the smart companies took the opportunity, when it was available, to refi their debt, locking in low long-term rates. Smart companies eliminated all short-term debt. Also, smart companies sold convertibles, as their stock was peaking. But, almost by definition, not everyone is smart. There are going to be stupid companies (many, many of them) who are still reliant on ST debt, still reliant on the commercial paper market (remember when it froze up last time, and GE needed a government bailout?). How many companies are stupider than GE? Is the moral hazard now, greater or less than in 2008?
As far as the relationship between Treasuries and corporate bonds, I'm not sure what you are saying. Perhaps you could explain. Unfortunately, the government is now "fixing" non-market prices for both short-term and long-term government debt. Since prices are now decided by inscrutable bureaucrats, I'm not sure what conclusions can be reached, other than: "They wouldn't do this if they weren't desperate."
< virtually every market is "signalling" recession>
About the only indicators not signaling recession, are those that can't happen because of simple math. The yield curve can't invert, if ST rates are nil. When all the forward indicators say the same thing, what does that tell you? |
