On Wednesday we showed you the following chart from BofAML:
So that right there should tell you all you need to know about just how dependent your junk is on the flow of central bank liquidity and resultant bid for risk. Those blue humps are the 3-month change in global CB QE, and the yellow bars represent rallies/selloffs in global high yield (the right-scale is inverted – that is, remember that spread compression is a good thing).
So just to drive home that point and to underscore the extent to which “dovishness” is key when it comes to short-circuiting the type deflationary dynamic we saw last week in crude, we thought perhaps you might enjoy the following two charts which depict just how dependent your junk truly is on the perpetuation of the generally dovish monetary policy regime…
