Jesus folks, we’re falling asleep over here.
Wednesday was one helluva boring day.
Thankfully, there’s always junk bonds to talk about and we’ve been saving up one fun chart for just such a time as this.
There’s been a lot of chatter lately about what’s most vulnerable in the event the market loses all faith in the Trump trade and things start to fall completely apart. For now, BTFD is the rule of the land, but who knows, that may change (*scoffs*).
Remember what Bloomberg’s Cameron Crise said on Tuesday? Here’s a refresher:
Having outperformed the broad market immediately after the election, high tax-rate companies have given back all of those gains and have now underperformed.
That suggests that there is relatively little in the price and thus, despite hand-wringing about the topic, probably little scope for near- term disappointment on this front.
That proxies for this: where have we seen the Trump trade faded? Which in turn proxies for this: what assets are still clinging to post-election gains and are thus most exposed?
Obviously “stocks” is one answer. But going beyond the obvious, let’s add HY spreads to the chart shown above and see what we get, shall we? Have a look at this:
So you know, that’s just something else you can probably ignore if you’re in junk bonds. All it shows is that, if high tax rate companies have faded all of their post election gains relative to the broad market, HY has barely given back anything.
Again, just ignore that and stay long.